Most people juggle a couple of credit cards — maybe one for travel perks and another for cash back on groceries and gas. But managing 42 credit cards is a whole different story.
As one couple recently shared with the Washington Post’s personal finance columnist Michelle Singletary, the two are looking to downsize their massive collection of credit cards and they’re hoping to do so without tanking their credit scores.
“As we near retirement, what should we do to pare down this number so it’s more manageable?” they asked, worried about the impact of closing dozens of accounts.
With so many open accounts, this couple’s dilemma isn’t just about cutting back — it’s about finding a balance between simplifying finances and preserving their credit history. Closing too many cards at once could lower their credit score, but keeping them all active is unnecessary.
While this couple’s concern about closing so many credit cards is valid, holding onto 42 is far from typical. For context, the average U.S. consumer has 3.9 active credit cards, according to Experian.
Canceling a credit card might seem like a smart way to simplify your finances, but it can hurt your credit score. That’s because your credit utilization ratio — the percentage of available credit that you’re using — is a key factor in your score.
For example, let’s say you have five credit cards with a total credit limit of $50,000 combined, and you’re carrying a $5,000 balance across all of them. That balance isn’t a problem because it only takes up a small portion of your total available credit.
But if you close two of those cards, your total credit limit drops to $30,000 — but your $5,000 balance stays the same. Since you now have less available credit, the percentage of credit you’re using jumps significantly. Even though your debt hasn’t increased, your credit score could take a hit because lenders can see that you’re using a larger portion of your available credit.
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