How Many Credit Cards Should I Have? 

Too many or too few credit cards could hurt your credit score.

Whether you’re an individual interested in personal credit cards or an entrepreneur in need of a business credit card, you should consider whether one credit card will be enough for your lifestyle and needs.

With the fear of debt from having too many credit cards, people  — especially younger Americans — tend to avoid opening accounts. As a result, many only have one credit card to keep debts low and protect their credit score. But approaching credit cards in this way can actually keep you from gaining a higher credit score. Plus, you could miss out on the benefits of having more than one credit card.

Read on to find out how many credit cards you should have, as well as some of the key benefits and drawbacks of having more than one credit card. With sound financial management, you can benefit from having multiple credit cards without incurring debt.

How Many Credit Cards Should I Have?

A common question that people ask is: “How many credit cards should you have?” There is no hard and fast rule for how many credit cards a person should have. But your finances, your credit score, and, more importantly, your behavior with your credit can help you determine how many credit cards you should have.

Your credit history and credit score are especially crucial to how many credit cards you should have. A less-than-stellar credit history or a bad credit score can limit your chances of getting an additional credit card. Credit card providers won’t likely want to extend you another form of credit if you’re already having difficulty or are unreliable with your current credit payments and bills.

How Many Credit Cards Does the Average American Have?

If you’re wondering how you stack up to other Americans who have credit cards, a survey from credit reporting agency Experian noted that the average American in 2017 had 3.1 credit cards. Consumers with higher credit scores often tend to have more — with the average number of credit cards at seven — though they usually only use a couple of them at any given time.

Also: Are Credit Union Credit Cards Any Good?

Why Have More Than One Credit Card?

At first, you might think limiting yourself to just one credit card is wise. Indeed, having only one credit card would likely keep you from racking up too much debt. But when you weigh other financial factors,  having more than one credit card may seem like a good idea.

More Flexibility

Having only one credit card can be an issue due to its inflexibility. For example, if you need to pay for something immediately, and your one credit card is near the credit limit, then you might have a problem. But with a second card, you could have the flexibility to make the emergency purchase.

More Value

When you have a credit card, you typically pay the bank for the use of that card. So, it makes sense that you really should be getting the most value out of that relationship. One of the best ways to maximize that value is to have a couple of cards from different networks, with different rewards structures.

Having different rewards credit cards can help you spend more flexibly and get money back in either cash-back or rewards points. There are several major credit card issuers, and they all offer different perks on most cards.

Perks can include fraud and purchase protection, access to concierge assistance and roadside assistance, among other things. If you have more than one card, spreading your options around the various banks and networks can allow you access to more of these perks.

It’s also a good idea to choose cards with different rewards structures. You might have one card that accrues cash-back points on all your daily purchases and another where you can rack up airline miles when you fly, book hotels or dine out. When applying for a new credit card, choose cards that match your lifestyle, so you’re more likely to use the rewards you reap.

Lower Credit Utilization

Another important area in which multiple credit cards can help is with credit utilization ratio. Your credit utilization ratio is the amount of your outstanding credit card balance divided by the total credit line available. Therefore, if you have an outstanding balance of $1,500 on a credit card with an available credit line of $3,000, your credit utilization is 50% — higher than the 30% lenders generally prefer.

But if you have more than one credit card, say, a second one with only $100 outstanding out of a $5,000 limit, then your credit utilization ratio would decline. With two credit cards, your credit utilization is now $1,600 outstanding out of $8,000 in total available credit, equivalent to 20%.

Learn: 8 Signs It’s Time To Get a New Credit Card

Increase in Credit Age

Multiple credit cards can also help build your credit score in other ways. Creditors often weigh credit age heavily, and your credit score takes into account the average credit age across all the credit accounts you have. So, a long history of responsible credit use across different accounts can work in your favor.

Another tip for building lengthy credit age is to avoid closing out credit card accounts. If you’ve paid a credit card balance in full, your credit score stands to gain from the low balance as long as the credit account is active. There are always exceptions in which you may need to close a credit card account, but it’s often better to keep them open with low balances to avoid dinging your credit score.

What’s the Maximum Number of Credit Cards You Should Have?

Just like there’s no definitive answer to how many credit cards you should have, there also isn’t one for the maximum number of credit cards you should possess. Overall, it’s a personal decision that should take into account certain factors, such as your credit score and credit history.

Having multiple credit cards typically doesn’t impact your credit score or creditworthiness as long as you manage them appropriately. In fact, building a consistent, on-time payment history and keeping a low balance-to-credit-limit ratio on all your cards can boost your credit score.

As long as you can pay toward the balances regularly and aren’t paying for rewards services you aren’t using, the limit on how many credit cards you should have is up to you.

How Can You Use More Than One Credit Card at a Time?

Some high-spenders, regular travelers and business owners regularly use a handful of cards and carry as many as 10 at a time. Often, they put the cards to use building up points for travel or other rewards and regularly pay off most of the balances to avoid interest expenses. These types of users rarely pay cash or use debit cards because credit cards tend to offer more protection, especially during both domestic and international travel.

Others keep two main cards on hand and spend equally between their credit cards and other forms of payment, including cash or debit. With so many credit card rewards programs available, it can be a waste to swipe a debit card instead of a credit card. But if you aren’t financially disciplined enough to pay off credit card balances regularly, keeping your card totals down is a good idea.

Compare: 10 Best Travel Rewards Credit Cards

Drawbacks to Multiple Credit Cards

When determining the maximum number of credit cards you should have, consider some of these drawbacks associated with multiple cards.

High Debt Load

A straightforward issue with multiple credit cards is the capacity to get in over your head in terms of debt. On the one hand, if you already have a history of having trouble with high debt, you might not even get approved for additional credit cards.

On the other hand, if you have a good credit history and get approved for additional credit cards, you need to keep close track of your balances. Without vigilance, even a responsible credit card user can rack up debt quickly when utilizing multiple credit cards.

Annual Fees

Another reason not to open up multiple card accounts are the annual fees, which can add up. If you aren’t earning and using enough rewards on a card to cancel out the annual fee, it may not be worth it to keep the account open.

Read Next: Top 10 Best Balance Transfer Cards

Temporary Drop in Credit Score

Applying for any credit card — first or additional — almost always involves a hard pull of your credit history by the creditor, which temporarily lowers your credit score. So, if you apply for multiple credit cards at once, you could be doing yourself a disservice. Not only can this reduce your credit score, but it can also cause all of your applications to be denied — especially if your credit score was borderline to begin with.

Also, note that applying for one or more credit cards if you’ve recently applied for substantial loans, such as an auto loan or mortgage, can damage your prospects of getting a loan due to a temporary credit score drop.

See: Co-Branded Credit Cards Vs. Generic Miles: Which Type Of Credit Card Should You Choose?

Why Carry Credit Cards

Many people — especially younger generations — are trying to eschew debt, which means they look sideways at credit card offers. But here’s the deal: Credit cards do not have to equal debt. If you know how to use them properly, they can equal savings and extra cash in your pocket.

Here are just a few reasons to carry a couple of credit cards:

  • You can build a credit history without paying for the privilege of borrowing (if you pay your balance off each month).
  • You can rely on valuable purchase protections that make it safer to shop online, book travel or pay for goods overseas.
  • You can rack up points for free stuff, including travel.

One point should be made clear: The number of credit cards you possess is not the same as the number of credit cards you should carry around with you in your wallet. You should ideally have multiple credit card accounts open, but you should not always carry all your credit cards with you.

First off, if your wallet is lost or stolen, someone will likely gain access to your credit lines. Next, always having a variety of credit cards at your fingertips can result in impulsive purchases, which can saddle you with debt. Instead, carry only the credit cards that have the best and most relevant rewards programs to your everyday spending.

Compare: Are Rewards Credit Cards Worth More Than Cash Rewards?

Getting Cards with Varying Benefits and Rewards

One of the biggest reasons to have multiple credit cards is when they offer different benefits. In this case, carrying at least two allows you to double up on the perks.

Rewards credit cards let you earn points every time you spend. The way the points accumulate and what you can redeem them for differ by card and rewards program. So having two different rewards cards might be a boon. Popular cards let you earn points toward:

  • Cash back on your statement
  • Hotel stays
  • Airfare
  • Travel perks
  • Merchandise

For example, if you’re a frequent traveler with a penchant for staying in a certain hotel, you might opt for a co-branded card that lets you earn rewards points fast when you travel or spend directly with the hotel chain. At the same time, you might want a cash-back card that lets you earn extra cash back in specific categories, like gas or grocery purchases. With both cards, you can swipe the one that maximizes what you get from the transaction.

Depending on your situation, however,  you may want more than two credit cards. You might also want a card with a 0% APR introductory period to finance a large purchase without accruing interest, for example. Or you may opt for a card that will let you rack up airline miles, so you can fly free on your next vacation.

If you have a great cash-back or rewards card that lets you rack up benefits but comes with foreign transaction fees, you might also want a card without those fees if you travel outside of the U.S. regularly.

The right number of cards for you equals the number of cards you can easily manage without overspending while reaping the most benefits at little or no cost to you.

See: 10 Best-Rated Cash-Back Credit Cards

Get More Benefits with Additional Credit Cards

Having multiple cards from different banks or credit card companies lets you maximize the perks because the best credit cards come with benefits backed by the bank in question. Here are some common credit perks.

  • Rental car coverage on travel rewards cards lets you decline the rental car company insurance and remain covered — as long as you pay with the card that offers the benefits.
  • Various purchase protections provide peace of mind when you shop, including but not limited to refund guarantees and extended warranties.
  • Insurance coverage — like cellphone insurance and travel insurance — can save you money on mishaps.

While some luxury cards come loaded with benefits, no card comes with every perk available. That’s why it can be wise to hold a few cards from different companies. Having a variety of well-chosen cards can equal more perks and benefits than you could ever gain with just one card.

Check Out: Top 10 Low-Interest Credit Cards

The Bottom Line

More credit cards don’t have to equal more debt. If you’re smart, they can equal more positive trades on your credit report, which can boost your credit history and result in lower rates on auto and home loans.

So, what’s the final answer? The number of credit cards a person should have depends on the individual. For best results, determine the right number of credit cards for you based on factors such as your credit history, credit score and financial habits.

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