The Average American Has This Many Credit Cards

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There are many benefits to using credit cards that make them an appealing alternative to cash. Not only do credit cards offer built-in protection on your purchases, but most offer rewards that give you cash back on the things you're buying.

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The problem with credit cards, however, is that Americans tend to abuse them. Case in point: U.S. credit card debt reached a record high of $1.0217 trillion earlier this year, with the average household carrying roughly $16,000 in credit card balances. And while that's not necessarily a symptom of having too many credit cards, it does stand to reason that the more cards we amass, the greater the opportunity we have to overspend.

So how many credit cards does the typical consumer hold? According to Gallup data, Americans have 3.4 credit cards on average, but what's interesting is that a good 24% of adults don't have a single credit card to show for.

Furthermore, of the 76% of Americans who do have at least one credit card, nearly half (48%) report being in debt as a result. It therefore raises the question: How many credit cards is too many?

Should you limit the number of credit cards you have?

From a logistical perspective, having more credit cards opens the door to financial mismanagement. Think about it: It's easier to remember to pay one or two bills than to keep track of eight different balances and due dates.

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But in some cases, opening multiple credit cards makes sense. For example, if there's a retailer you shop at frequently, opening a store credit card could be a smart move. That's because store cards tend to offer discounts to cardholders in addition to rewards, and if you limit your purchases to needs, as opposed to wants, having a store card can really pay off. On the other hand, store cards are usually self-limiting -- you can't use a store card to pay for gas or other outside purchases, so if you hold one, it's usually in addition to a standard card backed by a major network, like Visa (NYSE: V).

But logistics aside, the problem with having multiple credit cards is that it makes racking up debt a much easier prospect. The higher your credit limit, the more options you have to overspend. And if you're not careful, you could easily wind up in a situation where you're in way over your head.

Then again, having multiple credit cards could actually benefit you from a credit score perspective. That's because the more cards you carry, the greater your total line of credit is likely to be, which can help you keep your credit utilization ratio in favorable territory.

Your credit utilization ratio is a measure of the amount of available credit you're using at a given point in time, and it's a crucial component of calculating your credit score. If your total credit limit is $10,000, and you're carrying a $2,000 balance, your ratio will sit comfortably at 20%. To avoid damaging your credit, you'll need to keep your personal ratio at or below 30% at all times, so if opening multiple credit cards raises your limit and you spend responsibly, things can work out in your favor. The problem, of course, is that many folks don't spend responsibly, and are better off limiting themselves to fewer cards and less temptation.

A smart approach to carrying credit cards

The decision to hold multiple credit cards boils down to one key question: Can you trust yourself to not go overboard? If the answer is no, then you're best off limiting yourself to a single card. Otherwise, you've got more leeway to sign up for multiple accounts.

That said, be careful not to open too many new credit cards at once, because that could actually drag down your score. Each time you apply for a credit card, it's considered a hard inquiry on your credit history. It's not a big deal if it happens once, but a series of hard inquiries could be pretty damaging.

One final thing to keep in mind about credit cards is that while you can get away with having more than one, you don't necessarily need three or more. It's a good idea to have one backup credit card in case your primary card is lost, stolen, or temporarily unavailable, but if you have a decent amount of available credit and don't need more, you might consider getting two cards and calling it a day. If anything, it'll free up valuable space in your otherwise overstuffed wallet.

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Maurie Backman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Visa. The Motley Fool has a disclosure policy.