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How Many Credit Cards Should I Have?

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How many credit cards should you have? That’s a good question to ask. But, I think you know the answer if you’re buried under debt. And, that’s not having more than one credit card — if any at all.

The main problem with multiple credit cards? Your debt repayments can become unmanageable.

At the same time, there’s no one-size-fits-all answer to how many credit cards you should have. What’s more, there are a variety of rewards available with multiple cards, including miles and points as well as cashback. Additionally, credit cards can have a positive or negative effect on your credit score.

Despite this, Americans still love their credit cards.

According to Experian:

  • The average balance on a credit card is $5,221
  • Approximately 25% of revolving credit is utilized
  • The average number of credit cards is three
  • There is an average balance of $1,887 on retail credit cards
  • 1% is the average delinquency rate between 60 and 89 days past due

Is there a perfect number of credit cards? Based on your financial situation and credit management skills, the answer will differ for each individual. But, here are some guidelines to help you decide.

Is it Possible to Have Too Many or Too Few Credit Accounts?

A credit score formula will not punish you for having too many credit accounts. But too few can be detrimental. In fact, according to credit bureaus, keeping five or more accounts, which can be a mix of credit cards and loans, is a reasonable goal.

If you have a limited number of accounts, scoring models may find it difficult to give you a score. There’s a lot more risk associated with thin files, too — which are four or fewer accounts. And it’s more difficult to score well with a thin file than with a fat one.

A thin file can have a greater impact on your credit score than a large file. For example, if you have a few credit cards, you might not exhaust your credit limit. Most people with the best credit scores use less than 10% of their credit limit, which is called credit utilization. Having more credit cards may help you maintain a low credit utilization rate.

The downside of having lots of cards is that if you miss a payment, your score will suffer. As such, you should be able to stay up to date on due dates. Or, better yet, set up automatic payments.

Why Multiple Credit Cards Are Better

It’s a good idea to have more than one credit card for a number of reasons:

  • Having more credit for discretionary expenditures.
  • Merchants may only accept one kind of card, making it more convenient.
  • In case of loss, theft, or compromise of another card you have a backup card.
  • One card may offer miles and another may offer points.
  • Over time, you can build your credit score.

The Danger of Multiple Credit Cards

If you don’t keep your spending under control, having more than one credit card can become a liability. Increasing credit and convenience can result in missed payments, rising debt, and possibly lower credit scores.

But, that’s just the tip of the iceberg. Here are some other potential issues with multiple credit cards:

  • Spacing out the application for credit cards. Credit applications result in “hard inquiries,” which can negatively affect your score. It can be considered a warning sign if you apply for multiple credit cards within a short period of time, as all those hard inquiries add up over time. Your credit score won’t be adversely affected by a lot of hard inquiries if you space them about six months apart.
  • Managing multiple billing cycles. You have to keep track of more due dates and credit limits the more credit cards you have. Paying your balance in full is easier if you automate monthly payments or align your due dates with paydays.
  • The timing of credit applications with future purchases is important. To protect your credit score, you should time your credit applications if you plan to make a big purchase. One credit card application can negatively impact your credit score, but the points will return about six months later. Hold off on applying for credit cards during this timeframe.

A Variety of Cards, A Variety of Benefits

You can maximize your rewards on every credit card purchase when you have a variety of credit cards.

In certain months, you can earn 5% back on groceries, hotels, restaurants, and gasoline (subject to a cap of $1,500 in combined spending per quarter) if you have a Discover Cash Back card. During the nine months when Discover doesn’t pay 5% cash back on gas, use another card that gives you 2% back on gas.

In addition, you may have a card that offers 1% back on every purchase. In cases where a higher reward is not available, this is your primary card. With your Discover card, you might earn 5% on clothing purchases in October, November, and December; during the rest of the year, you would earn 1%.

You may also want to consider store-branded credit cards that can only be used in that particular store or online. If you’re doing a lot of shopping at one store, like for school supplies, holiday gifts, or major purchases like appliances, opening a brand-new store credit card can be a huge benefit. It may be beneficial to have a store card to get a discount. But if the store card is no longer needed, it may be a good idea to close it afterward.

There is a danger of going overboard if you have too many accounts. Again, you may be more prone to forgetting a payment or losing your cards. In turn, any savings that you might have earned will quickly be ruined by such oversights.

How Many Credit Cards Should You Have?

A person’s unique financial situation and spending history will dictate how many cards they should have. Your main concern should be whether you can pay off your credit cards on time every month. Also, don’t forget to include fees in addition to the monthly payments.

To put it another way, what one consumer finds manageable may seem overwhelming to another. In the case of people with bad credit (or bankruptcy) or just starting out, having one credit card may be more than enough. And, this establishes your ability to manage revolving debts.

Initially, start with one account. And as your financial habits improve, you can consider opening a second.

Most experts recommend having at least two different credit cards. As an example, it’s useful to have both a Visa and an American Express card just in case a merchant does not accept one of them. In order to maximize your rewards, look for cards that offer cash back and miles.

If you do have multiple cards, keep a third credit card at home in case your wallet is lost or stolen if you keep two credit cards in your wallet. And, credit cards for emergencies should have a high credit limit, low-interest rates, and no annual fees.

The Credit Score Impact of Multiple Credit Cards

Credit utilization rates, also known as debt to credit ratios, can indirectly affect your credit scores if you own multiple credit cards.

In other words, credit utilization is the ratio of the amount of credit you use to the total credit you have available. The credit utilization rate of a customer should be below 30 percent, according to lenders. When your rate exceeds 30 percent, it may negatively affect your credit score.

By opening a new credit card, you increase your credit limit. As a result, you’ll have more spending room before you hit the 30 percent credit utilization rate. By lowering your credit utilization rate, opening a new card could improve your credit scores if yours is already above 30 percent.

It is, however, important to keep track of what you owe when you have multiple credit cards. Keeping track of your credit card spending, due dates, and interest rates can help you avoid credit card debt, high-interest rates, and late fees. Additionally, paying off your credit card balances in full each month is a good idea.

FAQs About How Many Credit Cards You Should Have

1. How many credit cards should I have?

The answer to this question is different for everyone based on their credit history and credit needs. All you need is one credit card in order to build a solid credit history. But you may be interested in using multiple cards in order to take advantage of different rewards programs or card features. If you can handle credit responsibly, there’s nothing wrong with having multiple credit cards. But if you can’t afford to pay your credit card bills in full every month, you probably shouldn’t add another card to your wallet.

2. Can I apply for more than one credit card at a time?

There is no limit to how many credit cards you can apply for at any given time, but it isn’t recommended. Managing applications and cards can be difficult, and it also reflects poorly on credit reports.

Also, you may be deemed ineligible when applying for certain new cards if you consistently open credit cards for welcome bonuses and temporary benefits, then close them out without paying any fees.

3. How often should you apply for a credit card?

In general, it’s best to apply for a credit card once every year if you need or want one. Moreover, you should not apply for more than one card at once. Applying more often will hurt your credit score due to repeated hard inquiries. As a result, creditors will view you as a greater risk and less likely to approve your loan or credit line.

4. Are secured credit cards better than unsecured credit cards?

Secured cards are a great way for people with poor credit to begin building or improving their credit. Although they aren’t necessarily better or worse than unsecured cards, they have more restrictions to reduce the risk to the credit card company.

5. Are more credit cards beneficial to your credit score?

Your credit score can be helped by having multiple credit cards, but it can also be hurt by having multiple credit cards. Your ability to manage your credit cards will determine how well you are able to use them.

Keep your credit card balances low, and always pay your bills on time, no matter how many cards you have. Although a large number of credit cards won’t necessarily affect your score, you should avoid applying for several new cards at once. If properly managed, more cards and a higher credit limit can help you improve your credit score over time.

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We uphold a strict editorial policy that focuses on factual accuracy, relevance, and impartiality. Our content, created by leading finance and industry experts, is reviewed by a team of seasoned editors to ensure compliance with the highest standards in reporting and publishing.

Freelance Writer at Due
Albert Costill graduated from Rowan University with a History degree. He has been a senior finance writer for Due since 2015. His financial advice has been featured in Money Magazine, Fool, The Street, Forbes, CNBC and MarketWatch. He loves to give personal finance advice to millennials.

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