How Many Credit Cards Should You Have?

July 21, 2021

According to a 2020 Experian survey, the average American has three credit cards and two to three retail store cards, but how many credit cards should you have? 

The truth is, there is no magic number. What you carry in your wallet (or stash at home for emergencies) largely depends on your lifestyle and your needs. Instead of focusing on how many, consider how those cards are impacting your credit score and if they’re helping you reach your financial goals. 

Deciding How Many Credit Cards You Should Have Depends on Your Financial Goals

Your ideal credit card mix depends on your individual needs, personal finance goals, and where you are in your credit journey.

You’re a beginner or rebuilding your credit score.

If your credit history is still new or you’re working to repair past mistakes, you may want to consider a secured card. With secured cards, you pay a cash deposit up front that serves as collateral for the card issuer in case you default on your payments. Your cash deposit is typically equal to your credit limit. Your payment history gets reported to the credit bureaus, so keeping up with payments can help improve your credit score.

You want to maximize rewards earnings.

Rewards programs can vary greatly between credit card providers. While one card may offer great cash back, another may let you rack up travel points. That’s why some people choose to have multiple cards they use in tandem to maximize reward benefits. However, earning rewards isn’t as important as having a healthy credit score. It is always a better idea to apply to credit only when you need it—and can manage it.

You want to buy a house or car.

If you’re planning on making a big financial move like buying a home, new credit card applications can backfire. Each new credit application triggers a hard inquiry, temporarily lowering your credit score. That’s why experts like the Consumer Financial Protection Bureau recommend forgoing new credit applications when you’re trying to secure a mortgage.

If you’re trying to qualify for a mortgage or auto loan with more favorable terms, your best bet might be to use your existing credit cards as tools to improve your credit score. That means paying your bills on time and keeping your balances and credit utilization low.

You have a large amount of debt.

While it can be tempting to apply for new credit cards to boost your available credit, if you’re in debt, the last thing you want to do is dig yourself in deeper. Consider all your options before applying for a new card, and consider budgeting strategies to help get you out of debt.

3 Ways Credit Cards Affect Your Credit Score?

When it comes to credit cards affecting your credit score, it’s how you use them that matters. This is especially true when your goal is building and maintaining good credit.

1. Payment history

Payment history has the most significant impact on your credit—making up 35% of your FICO score. Your payment history—that is, the record of how you’ve historically repaid your debts—shows potential lenders how reliable you are as a borrower. 

The best way to maintain a positive payment history is to pay your bills on time. Missing a due date can negatively impact your credit score. If you struggle to keep up with multiple credit cards, multiple late payments can do major damage to your score. Auto pay and bill reminders can help you keep track and pay on time. However, always make sure you can make the payment on time before you apply for a new card so you don’t get overwhelmed with bills.

2. Credit utilization

Credit utilization is the amount of credit you’ve used compared with the total amount extended to you by your lenders. To maintain a healthy credit score, experts recommend keeping your credit utilization rate at or below 30% across all your accounts. While some people spread monthly purchases across multiple cards to keep their utilization low, that strategy can also cause the temptation to max out multiple credit cards. Maxing out even one card can hurt your credit score. 

3. Credit history

The average age of your credit accounts is important to lenders because it demonstrates how long you’ve been managing credit. That’s why it’s sometimes a good idea to keep old accounts open and in good standing, even if you’re no longer using them to upkeep excellent credit. 

How Do I Know If I Have Too Many Credit Cards?

Just as there’s no hard and fast rule for how many credit cards you should have, there’s no universal rule for how many is too many. However, certain situations may indicate you’re juggling more than you can manage. 

You have trouble sticking to a monthly budget.

If you have a hard time sticking to a budget and have several credit cards with high limits, you could wind up overspending your way into debt.

You struggle to make on-time payments.

If you’re habitually late paying your bills—or worse, if you miss payments altogether—you may be managing too many cards. Missing payments doesn’t only trigger late fees; your credit score can take a nosedive, too. 

You’re being declined when you apply for new card offers.

If you’re having trouble paying current debt, or have too many inquiries on your credit report, it sends a message to lenders that you’re seeking more credit than you can handle. So before you apply for a new card, ask yourself if you truly need it. If you’re seeking out more credit because you’ve reached your limit on other cards, you may want to consider alternatives.

What Should I Do If I Have Too Many Cards?

Simply having multiple credit cards won’t negatively impact your credit score. In fact, keeping cards open can help both your credit history length and your credit utilization ratio. As long as the card doesn’t carry an annual fee or other charges, you don’t automatically need to cancel it. 

However, if you’d rather remove the temptation, you can cancel the card by contacting the credit card issuer. 

If you’re struggling to manage your credit card debt and need help getting back on track, consider a debt consolidation loan. A debt consolidation loan is a form of debt refinancing combining multiple balances from credit cards and other high-interest loans into a single loan with a fixed rate and term. This could help you pay down debt faster, save you money by reducing your interest rate, and even improve your credit score by diversifying your credit mix and reducing your total debt (as long as you’re not adding any new debt).2

The Bottom Line

When it comes to applying for credit cards, consider your financial goals, not a specific number (or perks offered by credit card companies). If a new credit card won’t help you reach those goals — or worse, set you back — tread carefully. And if you’re carrying credit card debt, consider all of your options to help you manage. 

Credit Card FAQs

How many credit cards should I have to improve my credit score?

There is no magic number of credit cards to hold in your wallet that will boost your credit score. Instead, apply for only what you need and focus on making timely payments, keeping your credit card balances low (or paying them off in full every month if you can). 

Does having multiple credit cards hurt my credit score?

The answer depends on how you use them. If you stay on top of your monthly payments and keep your total credit utilization under 30%, you may be able to manage multiple credit cards without harming your credit. However, as a general rule, most experts recommend only applying for what you need. 

Should I open another card to increase my score?

Your credit score is determined by several factors—like your credit utilization, credit mix, and payment history. By opening another card you may lower your credit utilization and improve your credit mix, but it depends on your personal financial situation. Just keep in mind that opening a new card will likely lower your score temporarily. If you’re struggling with your credit or trying to improve a low credit score, it’s better to focus on properly managing the cards you already have. 

Should I get another credit card or personal loan?

Whether or not it’s a good idea to apply for a new credit card or a personal loan depends on how you’re planning to use the credit line. If you want to use credit to make everyday purchases and earn rewards, having access to a revolving credit limit via a credit card may be your best bet. On the other hand, a personal loan is often a better option if you’re looking to finance a big purchase or pay down debt over a longer period. In either case, shop around to find the credit option that matches your financial goals. 

Can closing a credit card hurt my score?

Sometimes. Closing a credit card can raise your credit utilization rate and reduce your credit age and number of accounts, which can negatively affect your score. In some cases, it might be best to keep your old credit card accounts open, though that depends on if your card carries any fees. 

Reducing debt and maintaining low credit balances may contribute to an improvement in your credit score, but results are not guaranteed. Individual results vary based on multiple factors, including but not limited to payment history and credit utilization.

Savings are not guaranteed and depend upon various factors, including but not limited to interest rates, fees, and loan term length.

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