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How Many Credit Cards Should I Have?

If you’re wondering how many credit cards you should have, you might be looking for some number you can use to measure if you have too many, not enough, or the “right” amount. The truth is that there is no magic number, and the right amount of credit cards for you now may not be the ideal amount later as your income, expenses, and priorities change.

How Many Credit Cards Should You Have?

The number of credit cards you should have depends on a variety of factors like your ability to manage credit cards responsibly and the potential value you would gain from holding only one or multiple cards. To be clear, a credit card is not a requirement for managing your finances, and some people are very responsible with their finances without any credit card use. However, credit cards can serve multiple purposes, and knowing how they work and how to manage them responsibly could prove beneficial for you in the present and future. Whatever you decide, remember that you should not carry more credit cards than you can responsibly manage.

Go Without a Credit Card

According to the Federal Reserve, 17% of adults did not have a credit card in 2020, and they likely had their reasons. For some, the limit on a credit card can be a temptation to overspend, and they would rather pay cash or use a debit card to feel more in control of their budget and avoid going into debt. Others may have already opened a credit card in the past and did not have the best experience.

These are all fair objections, but it’s important to know the benefits of having a credit card as well. A credit card can help you build positive credit history with responsible use, earn rewards on everyday purchases, and more. If you’re on the fence about getting a credit card, keep reading to learn how to pick your first one and what habits you could practice for using it responsibly.

Start with One Credit Card

Before leaping at the first credit card offer you qualify for, you will want to be selective when choosing your first card. For starters, we suggest steering clear of cards with an annual fee because you may not qualify for the most competitive credit card at first. You don’t want to be on the hook for a yearly fee for a card that might become obsolete once you qualify for more favorable cards. While it’s true that you can close a credit card account, it’s not best practice to do so because closing one could decrease your average age of accounts, which may lower your credit score. This is why doing your research before applying for credit is significant, especially for your first credit card, then every other card that follows.

Other the other hand, starting off with one credit card can be a great training ground for responsible credit card management. With your first credit card, you can establish healthy habits such as paying your bill on time and in full every month, and not using your credit card for expenses you couldn’t afford to pay for with cash if you had to. As you manage your first credit card responsibly, you can help build your credit history and your confidence as you prepare yourself for managing an additional credit card later in the future.

Add No-Annual-Fee Cards Based on Your Spending

Once you have mastered how to manage one credit card, you can look into adding more. To keep your overall costs low as you gradually take on more credit cards, we recommend opting for those with no annual fee and rewards that fit your spending. Reference your budget or monthly credit card statement to get a feel for what spending categories you could focus on with these additional cards.

Perhaps when you got your first credit card, you could only qualify for a student or secured credit card, and now you spend a significant amount on groceries. A credit card that offers higher rewards on grocery store purchases and no annual fee could be a better alternative than using a debit card or cash, leading to you earning rewards for routine expenses. The same could be said for other categories as well, and by pursuing cards with no annual fees at the start of your credit journey, you won’t have to fret over those cards later costing you every year, even if you don’t use them.

Add Annual-Fee Cards for Rewards if the Math Works

After holding no-annual-fee credit cards for some time, you might want to add a credit card with an annual fee for more access to exclusive rewards. Before going for a card with an annual fee though, we recommend crunching the numbers to make sure that your annual rewards or “savings” are greater than the annual fee. For example, if you are considering getting a credit card with an annual fee of $95, then you want to make sure you earn at least $95 in rewards or save that amount every year so that you’re not paying more than you need to, to use your credit card.

Moreover, annual-fee cards could have various benefits, meaning that the rewards you earn may not tell the complete story. For instance, a gas station with competitive prices in your area could also offer a credit card that allows cardholders to receive a discounted price per gallon and rewards by getting gas there. In this scenario, how much you save every time you fill up could positively influence the card’s value, not just what you earn in rewards. By the same token, an airline could offer a credit card that charges an annual fee, but after so many miles or flights, a perk could be earning a free or discounted flight, potentially making the annual fee worth the upfront cost. All things considered, if you opt for an annual-fee card, make sure that the math works because that fee will charge every year regardless of how often or little you use the card.

How Many Credit Cards Is Too Many?

There is no absolute number for how many credit cards is too many. In fact, the appropriate number will vary from person to person. For some cardholders, one to two credit cards may be enough to manage bills and responsibilities, and being accountable for fewer credit cards could help them not spend beyond their means. On the contrary, others may do fine with more credit cards, preferring to hold several cards at once to optimize rewards and take advantage of the perks offered by each. Therefore, the more pertinent matter is making sure that you can manage your cards responsibly, no matter how many you have.

Despite the fact that there is no definite number of credit cards that would be considered too many, you do want to keep an eye on how many credit cards you have and how many you apply for. Having several credit cards on your credit report can be a red flag for some lenders who may view you as a liability, even if you pay your balances in full every month. In addition, the amount of credit cards you open or apply for in a short period of time could get in the way of your application being approved. Some credit card issuers have specific rules about how many times you can apply for a credit card within a year, two years, etc. Therefore, it’s best practice to do your research and make your applications count for the card(s) you want and wouldn’t mind carrying for the foreseeable future.

Is It Good to Have Multiple Credit Cards?

Whether or not it’s good to have multiple credit cards will vary depending on the person. One card could be sufficient for some people, and three or four might be optimal for others. That being said, having more than one credit card can be more beneficial than only having one if you use them responsibly. To be specific, while one credit card with a generous limit may allow you to use it for a variety of expenses, carrying more than one can be advantageous for your credit utilization rate and optimizing rewards.

Available Credit

Your overall credit limit increases every time you get a new credit card, and this is significant for your credit utilization rate which influences your credit score. According to Experian, your credit utilization rate can potentially impact up to 30% of your credit score, making it an influential factor. Your credit utilization rate is your total revolving credit debt divided by your total available revolving credit limit. Consider the following scenarios:

  • Scenario 1 - You have two credit cards, one with a balance of $500 and a limit of $2000, and another with a balance of $1000 and a limit of $4000. Your overall credit utilization rate would be 25%.
  • Scenario 2 - You have one credit card with a balance of $1500 and a limit of $4000. Your credit utilization rate would be 37.5%.

Despite spending the same amount of money in both scenarios, the difference was that in the first, the total available credit limit was higher, so it yielded a lower credit utilization ratio. Having more than important to know what you can handle responsibly.

Keeping Up with Payment Due Dates

Every time you get another credit card, you add another monthly bill to keep up with. With multiple credit cards, it is unlikely that you will have the same payment due date for each, which can make knowing when to pay your bills confusing. To simplify matters, we recommend that you set up reminders to stay organized with your credit card payment due dates, or any other recurring bills. For instance, you could set up reminders to pay your bills with your phone or computer, or even try a different approach by writing your payment due dates on a calendar and placing it somewhere you will always see it like a fridge. Even someone with a strong history of paying their credit card bills on time could accidentally miss a payment, potentially incurring undesired fees and negatively impacting their credit score. In general, organization is key to paying your bills on time, and it becomes more valuable as you take on more credit cards.

Annual Fees on Multiple Cards

If you carry multiple credit cards, one thing to be wary of is the number of annual fees that you may have to pay. Because credit cards with the most lucrative rewards tend to carry annual fees, you might feel encouraged to hold a few or several. This is fine, but as you diversify your credit card portfolio, you want to ensure that you are getting value from every credit card you have. This becomes particularly important for credit cards that charge you annually to use them. For example, if you have a credit card that charges you a $49 annual fee, then you need to earn at least $49 in rewards or savings to break even each year that you carry that card. If you have more than one annual-fee credit card, then you want to keep this break-even concept in mind for each one. In fact, you want to keep an eye on how much you’re paying in annual fees across all your cards. Without monitoring how you use your annual-fee credit cards, the fees can easily eat into the overall value you get from your cards, costing you more than you initially bargained for.

Should I Get Another Credit Card?

With at least one credit card under your belt, you could be looking into some other interesting offers. If you’re considering getting another credit card, there are a few matters that you should consider before making a final decision. Applying for a new credit card will likely impact your credit score, and depending on your credit history and circumstances, it might make sense for you to get one now or wait to do so later. The challenge is knowing when.

When to Get Another Credit Card?

A new credit card could come with new perks you currently don’t have and help you spread your spending across cards, lowering your overall credit utilization, which is good for your credit score. However, before you add an extra card to your wallet, time your decision right. Here are some situations in which it might be worthwhile for you to apply for a new credit card.

  • You responsibly manage your current card(s)
  • Evaluate how responsible you are with the credit card(s) you have now.
  • How you manage your current credit card portfolio could be an indication of your ability to handle an additional card.
  • If you pay your balance in full and on time every month, then your strategy would simply be to continue that pattern with another credit card. Sure, it’s another bill to account for, but if you’ve never missed a bill with your current cards, you might have reminders or auto-pay set up to stay on top of it.

If you check off those boxes, another credit card could work for you.

There is a card that helps fit your lifestyle: With so many credit cards designed to meet different spending habits, it can be a challenge to find one that works the best for how you spend money. There are credit cards that offer great rewards for travel, online shopping, dining, etc. While you may find some credit cards that offer a decent combination of these perks, some people prefer to optimize their rewards by having a credit card for each significant category of spending. For instance, if you have a card that offers great rewards for online shopping, but you also have a long commute to work or school, a card that offers ideal rewards on gas could help you save more in a category where you spend a large amount of money. If you don’t know where most of your money goes right now, creating a budget can help you figure that out.

You have a better credit score: Generally speaking, in the same way a better credit score can yield more competitive interest rates and terms on a loan, having a better credit score also grants you more options as you shop for additional credit cards. When you have little to no credit, your choices can be limited to starter credit cards like student credit cards or secured credit cards. While these cards can be preferable for building credit, they seldom offer the wealth of rewards offered by credit cards for those with stronger credit profiles. This is why you will want to evaluate how you could benefit from another credit card once your credit score has improved. If you do decide to apply for a credit card, be sure to do your research and opt for one that fits your lifestyle.

When Not to Get Another Credit Card?

Diversifying your credit card portfolio by adding another one can seem like a great idea for maximizing rewards and potentially improving your credit score, but there are instances where it would be wise to pump the brakes on this decision. Here are some circumstances in which you should revisit getting another credit card later.

  • Your current credit card bills are a struggle: If keeping up with one credit card is a lot to manage, then adding another credit card could be double the stress. Having more access to credit means that you will have to be even more responsible, and irresponsible use with more at stake could lead to paying more in interest, less spending freedom, and a lower credit score. Before adding an additional credit card, we recommend that you first develop the habits of a responsible user with the credit card(s) you have now. If you can’t pay off your balance in full and on time every month now, adding another credit card would not be the wisest choice in the moment.
  • You just applied for a credit card or got one: If you’ve recently applied for a credit card or got a new one, the lender likely pulled your credit report, which is known as a hard credit inquiry. A hard credit inquiry, or hard credit check, remains on your credit report for two years and can lower your score when it happens. Multiple credit card applications in a short period of time may be unattractive to some lenders, decreasing your chances of approval and perhaps preventing you from obtaining the credit card you had your eyes on. A general rule of thumb is to wait six (6) months between credit card applications. At the same time, keep in mind that credit card issuers have their own rules for how frequently you can apply for a new credit card.
  • You are looking to buy a house, car, or other big expense: When you’re planning on buying a house, a car, or even planning on taking out a personal loan, getting a credit card in the time leading up to that could get in the way of you receiving the best interest rate. Many lenders group credit scores into tiers, and depending on where your credit score typically falls, a recent hard inquiry could bump you down a tier. It may not seem like much, but on large expenses like a mortgage or car, a 1% or 0.5% interest rate difference could have a huge impact on your monthly payment and the interest you pay over the life of a loan. If you know that you have one of these major expenses coming up within 12 months, don’t let a new credit card cost you a better interest rate. Instead, take care of that larger expense first, and then revert your attention back to viable credit card options.

The Bottom Line

The right amount of credit cards could be 7 for one person, 1 for another, and 0 for someone else. Instead of aiming for a certain number of credit cards, those looking to hold more credit cards should pursue a number of cards that they can manage responsibly and comfortably, while being selective with their applications to dodge cards that don’t deliver on value. Above all, be sure to pay your bills in full and on time every month for all of your credit cards, irrespective of how many, to avoid interest and fees and maximize rewards.

Frequently Asked Questions

What Is the Average Number of Credit Cards Per Person?

According to an Experian national credit report on US consumers in 2020, the average US consumer had 3.84 credit cards.

How Many Credit Cards Can You Have? 

Technically speaking, there are no limits on how many credit cards you can have, but keep in mind that you will have to get approved for each one, which takes time. Amassing a large amount of credit cards in a short period could be difficult to do since many issuers may be reluctant to offer a card to an applicant with several recent applications. In addition, carrying too much debt on current credit cards or having a high credit utilization rate could spoil your attempt to get another one, so you want to keep your balances low across your cards before applying for more.

On another note, how many credit cards you can have with a particular issuer may be limited due to the total available credit they are willing to extend to one person. In this case, you may want to consider contacting your issuer to see if you could upgrade one of your less-valuable cards to a different one that better fits your lifestyle. Given these points, you still want to avoid opening credit card accounts solely to have more. Every credit card in your portfolio should provide value not offered by another.

Does Adding a Credit Card Improve Your Credit Score?

Adding a credit card may ding your credit score in the short term because of the hard credit inquiry but improve your credit score in the long term if you don’t increase your overall spending. With the addition of another credit card, you can increase your total available credit and decrease your credit utilization ratio. It’s important that you don’t let your new credit card tempt you to spend more than you should. If your goal is to positively impact your credit score, you should aim to avoid carrying a balance by paying the balance in full for all your cards every month, keeping your utilization low.

Does Closing a Credit Card Hurt Your Credit Score?

Closing a credit card can hurt your credit score for primarily two reasons: increased credit utilization and decreased average age of accounts. Your credit utilization rate, which is your total credit card balance divided by your total credit limit, will increase once you close a credit card account because your total available credit across all your cards will drop. Also significant to your credit score, your average age of accounts could decrease if you close one. Instead of closing an old credit card account, you could keep it open and use it sparingly. However, if you have an older credit card that charges an annual fee and you don’t use it enough to earn rewards or savings that help you earn the fee back, then closing to account to save money might be worth it.

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