Buzz
There isn’t a set number of credit cards that’s perfect for everyone. The ideal amount depends on factors like your financial situation, spending habits, and knowledge, which can change over time. But many cardholders find a specific range works best for them, and there are valid reasons for it. Here’s how you can determine the right number of credit cards for your needs.
Benefits of holding multiple credit cards
As long as you’re managing your debt responsibly, having multiple credit cards can be advantageous. Credit scoring formulas don’t penalize you for opening several accounts—in fact, the opposite is true. More credit cards increase your overall credit limit, which can benefit your credit score (especially if your credit utilization stays low, under 10%). On top of improving your credit score, having multiple cards means more opportunities to earn rewards as well.
How few credit cards is considered too few?
The ideal number of credit cards you should have depends on your unique financial circumstances. However, we’d like to be more helpful than just saying, “Well, it depends!” So, what’s the right amount of cards for the average, responsible cardholder? A recent report from Experian found that the average American holds about four credit cards. Additionally, FICO discovered in 2018 that individuals with high credit scores (800+) typically have around three cards. Credit bureaus also recommend having five or more accounts (a combination of cards and loans) as a reasonable target.
Is it possible to have too many credit cards?
Yes, it’s certainly possible. The question of how many credit cards is too many depends on whether you can pay off the full balance on each one every month. Too many cards can become a burden to manage, and you may end up spending more than you intended. Whether you have one card or five, avoid using credit for purchases you wouldn’t typically make with cash. Any improvement to your credit score or cash-back rewards won’t be worth falling into credit card debt.
Although your credit score won’t decrease just because you have “too many cards,” be cautious when trying to manipulate the system. If you apply for and cancel numerous cards in a short period (known as “churning” cards), it could result in a credit inquiry that might lower your score by about five points for up to six months.
The key takeaway
If you currently have only one credit card and are paying off your balance in full every month, it might be time to think about adding one, two, or even three more to your wallet. For those already juggling multiple cards, it's wise to pay attention to whether it's time to swap out one of your older credit cards. To find the best card for your needs, you can browse top lists on websites like Credit Cards Explained here for options.
