How Many Credit Cards Should You Have?

Having many credit cards in and of itself isn’t good or bad for your credit. What impacts your credit is whether you pay all those credit card bills on time and what your credit utilization ratio is. When considering if you should get another credit card, think about why you want it, how you plan to manage it and pay off any balances you have, and whether that particular card makes sense for your financial needs. 

In This Piece

• Is It Good to Have Multiple Credit Cards?
• Will Having Too Many or Too Few Credit Cards Hurt My Credit?
• How Many Credit Cards Is Too Many?
• When You Should Get Another Credit Card
• When You Shouldn’t Get Another Credit Card
• The Best Way to Manage Multiple Credit Cards 

Is It Good to Have Multiple Credit Cards?

Having two or more credit cards can offer a number of benefits. These accounts can offer some cash flow flexibility each month. You can also apply for credit cards with very different perks or rewards to maximize the benefits you get. For example, you might have a credit card that lets you earn 5% cashback on groceries and dining and one that has an introductory 0% APR offer that lets you finance a larger purchase without paying interest.

However, multiple cards can only provide such benefits when you manage the accounts well. 

Will Having Too Many or Too Few Credit Cards Hurt My Credit?

While having no credit cards at all can be an issue for your credit score, whether having too many hurts your score depends on you. Credit cards can affect your credit score for better or worse in the following ways.

Credit Mix

Lenders want to see that you can manage more than one type of credit simultaneously. So, credit mix plays a role in your overall credit score. A healthy mix of both revolving credit, such as credit cards, and installment credit, such as auto or student loans, helps you maintain a higher credit score. 

Credit Utilization Ratio

Your credit utilization ratio is the amount of your available credit you’re actively using. For example, if you have one credit card with a credit limit of $1,000 and you have a balance on it of $100, that’s a credit utilization ratio of 10%. If you have three credit cards with a total credit limit of $10,000 and you have balances that total $5,000, your credit utilization ratio is 50%.

You want to shoot for a credit utilization ratio of 30% or lower to safeguard your credit score. That’s true no matter how many credit cards you have.

Credit Age

Credit age, which is the total time you’ve had a credit history as well as the average age of all your open accounts, impacts your credit score. Signing up now for a credit card you don’t really want and would need to cancel in the future can negatively impact your credit age. Once you close the account, its age doesn’t help your credit score. Be wise about which credit cards you choose so you can maximize your average age of credit.

On-Time Payments

Missing payments on your credit card is one of the fastest ways to damage your credit. If you have so many credit cards you can’t keep them all straight or keep up with making the payments on your balances, that’s going to be bad for your score.

How Many Credit Cards Is Too Many?

Again, there really isn’t a right or wrong answer here. It comes down to your financial situation and money management skills. Some people successfully manage 20 credit cards, while others are comfortable with two. 

To better understand if you might have too many credit cards, consider these potential signs that you’re overdoing the plastic in your wallet:

• You can’t keep up with payments. If your balances are so high you can barely make minimum monthly payments and can’t make headway on your debt, you’ve definitely crossed a line. 
• You can’t keep track of amounts. If it’s an enormous stress or seemingly impossible to keep track of your accounts, what you owe and when, you probably have too many credit cards.
• There are credit cards you’ve forgotten you have. Credit cards offer the best benefits when you use them regularly and pay off your balances each month. While having an emergency card in your wallet isn’t a bad thing, if you forget cards for months or years at a time, you may have too many to be useful.

How Many Credit Cards Do People Have on Average?

On average, Americans have three to four open credit card accounts. For Americans who do have credit cards, the average amount of debt per person is $30,365.

When You Should Get Another Credit Card

There are some times when getting another credit card might make sense. They include:

• When you want to decrease your utilization ratio. If you have a credit card with a credit limit of $2,000 and a balance of $1,000, your utilization ratio is 50%. If you apply for and get another credit card with a credit limit of $2,000 and don’t run up a balance on it, your credit utilization is suddenly 25%. Note that another option to lower your utilization ratio is to ask your current credit card company for a credit limit increase. 
• When the new card offers attractive, valuable benefits. If you’re a Delta Air Lines enthusiast who travels a lot, you might be able to max out miles and get a lot of value from a Delta travel rewards credit card, for example. If you don’t already have such a card, it could make sense to add it to your wallet. 
• When you want to increase your credit mix. If you don’t have a credit card yet or you have a lot of installment loans and only one revolving account, it might make sense to add a new credit card to the mix.

When You Shouldn’t Get Another Credit Card

There are also times when it doesn’t make sense to add a new card to the fold. Here are a few times you may want to rethink applying for a new credit card:

• When you’ve already been denied for one or more cards. Racking up denials by repeatedly applying for cards you can’t get hurts your credit score. Each hard inquiry drops your score by a little bit, so going on a credit card application binge can have a serious impact on your score. It can also make you look desperate, reducing the likelihood someone will be willing to approve you for credit in the near future. 
• When the annual fees aren’t worth it. Consider whether you really want to pay $50, $90 or even $400 every year to add a new credit card to your wallet. Annual fees can hover all over that range. If you do apply for a credit card with a high annual fee, review the fine print first to make sure the perks and rewards offered make up for that expense. 
• When you may have to cancel the card in the future. Avoid applying for a credit card if you know you’ll just cancel it sometime in the near future. Closing accounts can reduce your credit age and negatively impact your score.

The Best Way to Manage Multiple Credit Cards 

If multiple credit cards sounds like a good option for you, make sure you have a plan to manage them well. Consider tracking credit card balances with an app so you always know what your utilization rate is, how much you owe, when due dates are and how much you’re paying in interest. You can also use a spreadsheet for the same purpose.

Avoid cards with annual fees if possible. Those fees can add up. If you have five cards with an average annual fee of $50 each, you’re paying $250 a year just to hold all that plastic.

Sign up for credit monitoring apps like ExtraCredit to monitor your credit reports and see how all those credit card balances and accounts are impacting your score. You can also use ExtraCredit’s Reward It feature to apply for cards that seem like a good match for you and potentially get cashback rewards for doing so.