Can You Have Too Many Credit Cards?

While it's a good idea to have at least one business credit

The following are just a few reasons why it's a good idea for a business to not have more than two or three credit cards:

• It signals lenders that you have the potential to get over your head in debt fast. It may cause banks to decline you for other types of loans, knowing that you could run up a sizeable chunk of debt on your credit cards.
• A handful of cards are more easily lost, stolen, or misused by employees than is a single card.
• Each additional card means a monthly statement that must be carefully scrutinized to make sure each charge is legitimate, further increasing your paperwork.
• Each card likely has an annual fee, so too many cards probably wastes money on renewal charges.

Two cards are a good idea to help keep business and personal expenses separate. You might also benefit from a second business or corporate card, ideally from a different bank or issuer, to help expand your network of banking relationships. But more than three credit cards can become unwieldy. More cards mean more accounting work, as you must keep careful track of the payment due dates for each card to avoid paying late fees and getting slapped with an interest rate hike.

If you have several employees who travel for business and use a business credit card, carefully examine whether they all need the cards or whether they could use their own cards and submit expense reports for reimbursement instead. Consider dropping cards of employees who don't use them much.

Simplify your life. Fewer cards will help you more easily and efficiently monitor your spending, and can also help you avoid deceiving yourself about how much you owe. In the long run, having fewer cards will minimize the interest you're likely to pay.

If you find yourself in need of more credit, before you apply for more cards, ask your current credit card company to increase the limit on your existing card. Depending on your needs, you might also consider a line of credit secured against company assets, private equity, a loan against receivables, or other type of business loan before sending in another preapproved credit card application.