How Many Credit Cards Should I Have?
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At a Glance
It’s possible to have too many or too few credit cards. However, you should have at least five total credit accounts to build a complete credit score and history for lenders. These can include loans, but they can also be multiple credit cards.
According to Experian data, Americans hold an average of 3.84 credit card accounts with an average credit limit of $30,365 and a balance of $5,315.
Having multiple cards can have a number of benefits, including positively impacting your credit score and helping you maximize rewards. On the other hand, having too many or too few can have a negative impact. It’s important to balance your cards and financial responsibility.
In this article, you’ll learn:
- Is it good to have multiple credit cards
- How many credit cards is too many or too few
- Potential issues with having multiple credit cards
- Impact of multiple credit cards on your credit score
- How often you should apply for a credit card
- When to hold off on getting a new credit card
- Tips for managing multiple cards
Is it good to have multiple credit cards?
Generally, it’s recommended to have two or three credit cards at one time (in addition to other credit), as long as you use them responsibly. That means:
- Keeping the overall balances low.
- Making payments on time.
- Trying to pay off the balance in full each month.
Factors that impact your credit score include your payment history, amount owed, new credit, length of credit history, and number and type of credit accounts (credit mix). When you have a couple of cards, in addition to other types of credit, this can help you:
- Improve your credit mix.
- Build a positive payment history across multiple accounts.
- Increase the length of your credit history.
When you’re able to keep up with multiple cards, it can show lenders you know how credit works and can responsibly manage the accounts you borrow.
Plus, most credit cards have rewards programs, such as cash back, points, or miles, and using multiple cards strategically across categories can help you maximize the rewards you earn.
On the other hand, if you can’t responsibly manage multiple cards, balances, due dates, and credit limits, it may not be good to have multiple cards.
How many credit cards are too many or too few?
You aren’t punished for having too many credit accounts, but the number of credit cards “sweet spot” depends on each individual, their credit needs, and their financial situation. There’s not really a “rule” about how many cards are too many or too few. The most important thing is that you don’t have more than you can responsibly manage.
For most, two or three credit cards are enough. If you’re really savvy and want to maximize rewards, you can have more. However, when you start getting more than three, you need to be ready to:
- Carefully monitor your balances.
- Pay on or after the due date for each card.
- Pay off your balances in full each month (vs. just making the minimum payment).
- Check your credit reports regularly.
On the other hand, it can also be possible to have too few cards. If you don’t have a card at all, you may have difficulty building credit and improving your credit score. You may not even have a score at all, and this appears higher risk to lenders.
Additionally, having too few cards means it might not take much spending to use a lot of your overall credit limit, which can increase your credit utilization ratio.
Having a credit card is an easy way to build credit (if you’re responsible about it) and can be a good sign to lenders that you can manage your finances.
Potential issues with having multiple credit cards
Owning multiple cards can have its positives, but it can also have its downsides. The biggest risk you have with multiple cards is spending more than you’re able to repay. It’s easy to lose track of how much you’ve spent on each card, and when it comes time to pay them off, you may not be able to.
Additionally, keeping track of multiple cards, with different interest rates, due dates, minimum payments, fees, and rewards categories can be overwhelming. It makes it easier to miss a payment due date, accrue interest, or incur fees if you’re not careful.
Remember, charge-offs, late payments, and high credit utilization ratios all can negatively impact your credit score.
It can also be an issue if you apply for multiple cards at once due to the hard credit inquiries and negative impact on your score.
Impact of multiple credit cards on your credit score
There are a few ways having multiple credit cards can have a positive and negative impact on your credit score.
- Lowers your debt-to-credit ratio, also called your credit utilization ratio, which is the amount of credit you use compared to the total credit available to you. Lenders typically like to see a ratio below 30%. Opening a new card increases the total credit available to you, so you can spend more before hitting the 30% ratio.
- Making payments on time each month contributes to your payment history, which is about 35-40% of your overall score.
- Multiple cards improve your credit mix.
- Multiple cards also improve your overall credit age, which is the average age of all the cards you have. Keeping credit card lines open can help increase the age of credit.
- When you submit an application for a credit card, it triggers a hard credit inquiry. This decreases your credit score by a few points for a short period of time.
- If you make late or miss payments, this can significantly impact your score in a negative way (since payment history makes up the highest percentage of your score.)
- Using too much credit can increase your credit utilization ratio, which can decrease your score.
Related: Do More Credit Cards Help Your Credit Score?
How often should you apply for a credit card?
While having multiple cards can be a benefit to your credit, you shouldn’t apply for more cards than you can reasonably and responsibly use. Plus, each time you submit an application, the hard inquiry is triggered.
Too many hard inquiries over a short period of time can be a red flag to lenders, and it can lower your credit score. This is because it suggests you’re not managing your finances well and taking on more credit than you’re able to repay.
Apply for a card when you feel it makes sense for your overall situation. Then, wait at least three months (though six is preferred) to apply for another one.
When to hold off on getting a new credit card?
Having multiple credit cards can be helpful for your credit, but it’s not the best move for everyone. Honestly look at the type of spender you are and how realistic it is for you to responsibly manage multiple cards.
You should likely hold off on applying for a new credit card if:
- Your spending is out of control. Having multiple cards means you have access to more credit, and if you aren’t able to manage your spending, you can quickly rack up high balances on each of the cards. Not only does this make them difficult to pay off, but it can increase your credit utilization.
- You struggle with managing debt. A higher credit limit and inability to pay off the cards also mean adding to a growing debt balance. If you are already struggling to pay off existing cards and debt, you shouldn’t apply for a new card.
- You’re applying for financing. A high credit score and clean report are important to lenders if you’re looking to finance a new car, home, business, or something else. If you plan to apply for a loan soon, avoid applying for a new credit card until after you secure the financing.
- You have too many hard inquiries. Multiple applications mean multiple inquiries, and having too many in a short period of time can be a bad look and do serious damage to your score.
Tips on managing multiple cards
If you have multiple credit cards, here are a few tips to help you manage them:
- Set up automatic payments for each card, or at least a reminder on your phone or calendar, so you don’t miss a due date.
- Set up spending alerts on each card so you get a notification when it’s used on purchases. This can help remind you which card you’re using and how much you spent.
- Check your card balances often to make sure you’re not spending too much on one card, or on all cards and will have difficulty making the monthly payments.
- Additionally, check your credit score regularly to make sure you aren’t doing anything that could be having a negative impact.
- Try to pay off balances in full each month.
Additionally, if you have multiple cards, you’re likely earning a variety of rewards. Here are some tips to help you maximize rewards:
- Take advantage of bonus categories. Many cards have rotating bonus categories that have a higher cash back percentage (5%) or points ratio (5x) than regular spending. Use the card(s) for purchases in those bonus categories.
For example, say you have a card that has 5% cash back on groceries and restaurants and 1% on gas, and another card that offers 2% on restaurants and groceries but offers 3% on gas. You should use the first card for your grocery and restaurant purchases and the second for gas purchases.
Then, you may have a card that offers a flat 1% or 1x reward on all purchases. This would be your primary card for purchases where a higher reward isn’t available.
- Consider branded credit cards. If you often shop at a certain store, stay at a particular hotel, or fly one airline, consider a co-branded credit card. These can offer you significant earnings, discounts, and other rewards when used on purchases for that store/hotel/airline.
Not using a credit card can have a negative impact on your credit score, especially if you don’t have other types of credit. Without a card, it will be very difficult to establish and improve your credit score and build credit history, which can make it difficult to qualify for financing in the future. With that in mind, many people don’t own a credit card and stick to cash and debit, which can be ok.
Yes, closing a credit card can impact your credit history, which can decrease your score. However, as long as you close the card in good standing and pay off the balance, your score should rebound.
Learn more: Does Closing a Credit Card Hurt Your Credit?
Assuming you’re using the cards responsibly (keeping low credit utilization, paying off the balance in full and on time, etc.), two cards can build credit faster than one. You’ll have to double the spending and credit information reported to the credit bureaus each month, which can positively impact your credit.
Applying for a credit card triggers a hard credit inquiry, which can lower your credit score by a few points. Applying for multiple credit cards at once can have a much larger impact on your score and can signal to lenders you’re not able to responsibly manage credit.
Most card issuers will approve you for another of their credit cards if you meet the qualification criteria. It may even be easier to get if you are managing your current card well. However, you may not get approved for the exact same terms as your current card.