How Many Credit Cards Should You Have?

How Many Credit Cards Should I Have
Key Takeaways:
  • There are advantages to having multiple credit cards.
  • The average American adult has nearly four credit cards, but the right number for you depends on how you use credit.
  • You need to use credit responsibly so having multiple cards works for you rather than against you.

Either Too Many or Too Few Credit Cards Could Cost You

Is it irresponsible to have too many credit cards? And if so, how many is too many?

According to the Experian credit bureau, the average American has just shy of four cards. However, that’s not a magic number. There isn’t necessarily anything wrong with having more than that - or less. 

The truth is, handling credit responsibly is more about how you use your cards than about how many you have. 

This article will talk about the pros and cons of having multiple credit cards. It will explain how having multiple cards can actually help your credit score. It will also discuss some of the things you should do to handle multiple credit card accounts responsibly. 

Topics covered will include:

  • Should you have more than one credit card?

  • How multiple credit cards affect your credit score

  • Pros of having multiple credit cards

  • Cons of having multiple credit cards

  • How to manage multiple credit cards

  • How many credit cards should you have: FAQs

Should You Have More Than One Credit Card?

Though having too many credit cards can be a sign of trouble, the right number can help you manage your finances more effectively.

The sections below explain why having more than one credit card makes sense. 

Back-up cards

Every now and then, you run into a situation in which your credit card won’t work. 

Perhaps you maxed out the credit limit by mistake. Or the credit card company flags your location for being outside your normal travels. Or the issue is with the magnetic strip, chip or another security device on your card. 

In any case, having a backup card can prevent embarrassment or hardship when one card lets you down.

Different cards for different situations

Think about the tools you own. Whether they’re in your garage, kitchen or desk drawer, you probably own more than one tool. 

After all, they have different uses to meet different needs. Sometimes you need a hammer. Other times the job calls for a can opener. Or maybe you just need to staple some papers together.

Credit cards are financial tools. They have different characteristics so you use them for different situations. 

Here are some examples:

  • A low-interest rate card might be the best choice if you don’t expect to pay your balance off right away and want to minimize the amount of interest you pay.

  • A cash-back card might be a better choice if you do plan to pay off your balance in full, so you might as well get a little money back on your purchases.

  • A travel rewards card might be better than a cash-back card if you are making airline or hotel reservations. It might have especially generous rewards for those transactions and offer other travel-related benefits.

  • A balance transfer card can be an efficient way to consolidate other credit card balances and save on interest.

Having multiple cards with different characteristics helps you pick the best one for each situation.

Credit score

If you want a better credit score, keeping a few cards can improve it. Credit reporting agency Equifax says, “If your goal is to get or maintain a good credit score, two to three credit card accounts, in addition to other types of credit, are generally recommended.”

It pays to be opportunistic

Significantly, Experian found that users’ age affects the number of credit cards they carry.

For example, adults under the age of 24 have fewer than two credit cards on average. In contrast, people who are 40 or older typically carry more than twice as many.. 

One reason people tend to accumulate credit cards over time is so they can take advantage of special offers. 

If a new credit card offers an especially low interest rate, it often makes sense to take advantage of it. Or perhaps a special rewards offer or sign-up bonus might catch your eye from time to time.

You shouldn’t jump at every offer you see, but you should pay attention to them. That way you’ll know a great deal when you see it.  

How multiple cards affect your credit score

It’s not surprising that having multiple credit cards affects your credit score. The following sections discuss how having additional credit card accounts may affect your credit score – for better or worse. 

Credit utilization ratio

Credit utilization ratio is the percentage of your combined credit limits that is currently in use. For example, suppose you have three credit cards with a combined credit limit of $12,000. And that you’re carrying a combined balance of $3,000 on those cards. 

$3,000 is 25% of $12,000. So, in that situation, your credit utilization ratio would be 25%. 

Keeping your credit utilization ratio low helps your credit score. The best way to do that is to keep your balances as near zero as possible. However, assuming you’re going to want to use your cards regularly, it also helps to have more credit available. Having multiple credit card accounts can help you do that. If you added a card with a $3,000 limit, your utilization falls to 20% ($3k / $15k = 20%). 

Age of credit accounts

As mentioned previously, people tend to add credit card accounts over time. When doing that, why shouldn’t they close one of their existing credit cards?

Besides the fact that closing an account would reduce the amount of credit you have available, it would also affect the age of your credit accounts. 

It helps your credit score to have credit accounts that you’ve used successfully for a long time. The ages of your oldest and newest accounts are taken into consideration, as is the average age of your credit accounts.

This is a reason why you shouldn’t necessarily close an old credit account whenever you open a new one. Doing that is likely to bring down the average age of your credit accounts, and thus hurt your credit score. Worse, if you close your oldest account, it could damage your score even more.

New credit

While there are ways that having multiple credit cards can help your credit score, it isn’t all good news. Opening a new account reduces the age of your credit accounts. Also, the credit checks that take place when you apply for a new credit account ding your credit score.

Overall, there are ways that having multiple cards can help your credit score, but it’s best to add them selectively. Pick your spots, and when you do add a new account, don’t be too quick to close an old one. 

Pros of having multiple credit cards

Based on the above, here’s a summary of some of the advantages of having multiple credit cards:

  • It gives you a backup to use if there’s a problem with one of your cards.

  • It enables you to use the best card for each specific situation.

  • Adding cards selectively can allow you to benefit from favorable new offers.

  • Having more credit available can help you keep your credit utilization ratio low. That can help your credit score. 

  • Keeping old accounts active can help you preserve the age of your credit accounts. That’s another positive for your credit score.

Cons of having multiple credit cards

While there are advantages to having multiple credit cards, it’s also important to recognize the potential drawbacks:

  • Having too much credit available could enable you to spend more and rack up more debt.

  • Applying for and opening too many new accounts in a short amount of time could hurt your credit score.

  • Having more monthly payments makes your deadlines harder to keep track of.

  • Having multiple minimum payments could make your monthly payments less affordable. 

  • Multiple credit cards with annual fees can add to your expense of using credit.

How to manage multiple credit cards

The following tips can help you maximize the advantages and minimize the disadvantage of having multiple credit cards:

Keep track of minimum monthly payments

Keep a schedule of when payments need to be made each month. It might help to sign up for notifications or automated payments. 

Note that along with arranging to make payments on schedule, you also need to make sure you have money in your bank account to make those payments at the right times.

Keep overall credit utilization low

The advantage of having a lot of credit available is defeated if you carry balances and up a lot of that credit.

Strive to keep your overall credit utilization percentage below 30%. If possible, pay your balances off in full each month. That will not only help your credit score, but it will allow you to avoid paying interest. 

Prioritize your cards by their intended use

Know the features of your cards and which situations suit each one best. 

For example, know which one has the lowest interest rate, so you can use that when you expect to carry a balance at the end of the month. Know which has the best rewards, and the type of rewards, so you can match that to your spending plans. 

Avoid cards with annual fees

There are plenty of credit cards that don’t charge annual fees. Paying an annual fee only makes sense if you use the card in a way that the rewards exceed the level of those fees. 

Even so, you should have as few cards as possible that charge annual fees. Also, while you may get worthwhile rewards out of those cards, keep an eye out for better alternatives. 

Don’t carry all your credit cards with you

You may have several credit cards, but there’s no need to carry more than a couple at any one time. 

Have your go-to credit cards that you carry around generally. Swap in other cards for specific situations. Otherwise, keep your cards in a secure place at home.

Frequently Asked Questions

Will too many credit cards hurt my credit score?

It can if you apply for too many cards all at once. Over the long term though, having more credit available could benefit your credit score. Just be sure to make your payments on time and keep your balances low.

Should I have an emergency credit card?

Yes. It’s good to have a backup. This can come in handy if you need to use some extra credit now and then, or if there’s a problem with one of your other cards. 

What should I do if I’ve maxed out all my credit cards?

While one solution in that situation might be to add a new credit card account, it might be better to work on bringing your current card balances down. Maxing out your credit limit is a sign that you’re overspending and need to get serious about creating a sustainable budget.