How Many Credit Cards Should I Have?

How many credit cards do you have in your wallet right now? For most consumers, the answer is more than one. In fact, according to Experian, the answer is almost four. 

With perks like concierge services, discounted travel, and even cash back on qualifying purchases, having and maintaining multiple cards is slowly becoming the status quo and not the exception. 

The convenience of having access to varying lines of credit and the benefits of the reward programs can be alluring, but how do you decide how many you should have?

How many credit cards should I have?

Determining how many are appropriate for you is complex. You should consider several factors before applying for another credit card, including: 

Credit score

When submitting your application, your credit score is vital in determining whether you can obtain another credit card. Issuers will use this score to determine your eligibility and, if approved, your credit limit and the interest rate for the card. If you have a low credit score, you could have a low credit limit, a high-interest rate, or be denied entirely for credit card accounts.

Related: How to get a credit card

Income

How much money you earn each month is significant when applying for more credit cards. Applications will often request information about your primary financial obligations, such as your monthly payments for rent or a mortgage, to get an idea of your discretionary income and whether you’ll be able to afford to pay your credit card bill. 

Spending habits

Your current spending habits indicate if you can manage multiple credit cards responsibly. Having multiple credit cards could benefit you if you are disciplined enough to pay off your monthly balances. If you have a habit of carrying a balance month to month, limiting the amount of credit cards you have will help you avoid accumulating too much debt.

Annual fees

Some come with annual fees. Annual fees are justified if the credit card rewards and perks offer substantial benefits that outweigh the costs. When considering applying for another credit card, review your spending plan to ensure you can afford an annual fee and whether the benefits will offset the cost. 

Interest rates

A credit card's annual percentage rate (APR) refers to the yearly interest rate charged on balances after the grace period. Paying attention to this is extremely important if you habitually carry a balance, as having multiple credit cards with high-interest rates is a high-risk scenario for accumulating credit card debt. Credit cards usually come with a variable APR, meaning the interest rate can fluctuate based on an underlying index interest rate.

Rewards programs

The rewards program that a credit card company offers in exchange for you using their card is an important factor when considering applying for more credit cards. Will you be rewarded for the spending you’re already doing, or will you end up increasing your spending just to benefit from the program? Spending more than you otherwise would just to earn rewards, especially if you can’t pay off the balance at the end of the month, is not a good strategy. Any interest charges on a credit card will rapidly overtake the rewards you earned, potentially leading to debt and, ultimately, a net negative for you.

New accounts

Whenever you apply for a new credit account, it results in a hard inquiry being added to your credit report. While creditors like to see you open new accounts over time, opening too many accounts in a short amount of time is seen as risky financial behavior and could disqualify you from opening a new account. Inquiries affect your credit score for one year but are listed on your credit report for two years.

Related: Best credit cards

How do multiple credit cards impact your credit score?

Many people use multiple cards to diversify their benefits and build credit history. But while it can have a positive impact on your credit score, having multiple credit cards can also have a negative impact. 

Multiple credit cards mean you’ll have a higher available credit limit. This generally makes it easier to keep your credit utilization low, especially if you keep your balances low, which will help your credit score. Credit utilization is one of the most significant credit score factors. Experts recommend keeping your credit utilization below 30%, although most people with excellent credit tend to utilize less than 10% of their available credit.

However, if you struggle to keep track, or if your credit card collection is more a result of impromptu store card applications than an intentional strategy based on your spending, multiple cards can have an equally detrimental effect on your credit score. Having access to more available credit increases your risk of accumulating debt due to overspending. Juggling multiple balances that you can’t afford to pay off can also increase your chances of late or missed payments, impacting the most significant factor in your credit score: payment history.

As you can see, multiple cards can be a double-edged sword, and the impact it can have on your credit, for better or worse, really comes down to having a strategy and understanding your financial habits. 

How to manage multiple credit cards

Having multiple cards means you have access to a wider range of rewards. The key to this strategy is staying on top of your cards — making sure you’re getting rewarded for your spending and enjoying the perks of your cards. If you decide to open multiple credit cards, here are four tips to help you best manage them:

Get organized

Create a spreadsheet to track the benefits offered by each card to make sure you’re optimizing the various rewards programs. You can even use a label maker to put a note on each card so you remember which one to use when you’re at the grocery checkout, gas pump, or making a miscellaneous purchase. 

Set up auto-pay

More credit cards means more due dates to keep track of. Add your statement due dates to a calendar for visibility and set up auto-pay on all of your accounts. You can generally choose between making an automatic payment for the minimum due, the last statement balance, or the current balance. 

Automate payments for the last statement balance to avoid carrying a monthly balance, promoting responsible credit card use. But at the very least, set up autopay for the minimum due so that you won’t miss a payment or end up paying late, which could hurt your credit score.

Don’t be impulsive

Some stores offer discounts at check out if you apply for their store credit cards, but don’t do it. Remember, multiple factors should be considered when applying for one, and though a one-off discount is nice, that should not be the only thing you focus on when making that decision.

Related: When should I get a credit card

Review your credit cards regularly

Make a point of sitting down every few months to evaluate how you’re using your credit cards. 

Consider whether you’re regularly using every card. Look at the rewards you’ve earned on each card in the past few months to see if you’re getting the most value from the card. Evaluate benefits: lounge access, statement credits, or memberships. Assess usage; consider if the initial appeal has faded.

Also, take a look at your overall budget and see if there are any gaps in your strategy. Changed jobs, longer commute, spending more on gas? Ensure your credit card strategy aligns with your evolving lifestyle and needs. Are you planning a big vacation next year that you could use the points from a big welcome offer to help pay for?

If you find that some cards are just taking up space in your wallet without really earning their keep, or if you’re missing out on potential rewards or perks for spending you’re already doing on less-optimal cards, consider swapping out your lineup.

What if I have too many credit cards?

If you already have multiple cards, how many cards are too many? Because every consumer is different, the answer to this question will vary from person to person. Consider payment history, credit utilization, debt-to-income, and consistently unused cards when assessing how many cards are appropriate for you.

How is your payment history? If you currently struggle with meeting the payment due dates for your cards, that could be a sign that you have issues managing your debt, indicating that you have too many cards.

How high is your credit utilization ratio? If you consistently carry high credit card balances and find it difficult to pay down the balances due to the interest rate, this could be a sign that you are overspending and that multiple cards may not be best for you.

How high is your debt-to-income ratio? If a large portion of your income goes towards credit card debt, leaving little to no room for necessary expenses and savings, that could be a sign that you have too many cards.

Do you have unused credit cards? If you have to force yourself to use a credit card every few months just to keep it open, or you need to remind yourself about certain credit cards after an extended period, that could be a sign that you have too many credit cards. 

If you review your finances and believe you have too many cards, close the ones you identify as no longer beneficial. Account closure may temporarily drop your credit score. Prioritize good financial decisions to rebuild and improve your creditworthiness. If you’re making sound financial decisions, paying bills on time and keeping low balances on remaining cards can boost your credit score.

FAQs

Do I need a credit card?

Perks and points are nice, but it’s important to mention that credit cards are not required to build credit. While they are the most accessible and practical tools, alternative ways exist, such as installment loans or reporting rent payments to the credit bureaus. Before applying for new accounts, review your financial goals to ensure that adding the account supports your financial goals.

What types of credit cards are there?

There are many different types of credit cards, each tailored to meet specific needs and preferences. The most popular types are:

• Unsecured (aka “regular”) credit cards: This is what most people think of when it comes to it. Eligibility is based on creditworthiness and they can come with a range of benefits.
• Secured credit cards: These are designed for people with limited or bad credit. They require a security deposit that usually determines the card’s credit limit.
• Student credit cards: These are designed specifically for college students. They typically have lower credit limits and no annual fees. Some financial institutions even offer rewards for good grades.
• Rewards credit cards: These cards offer rewards — in the form of cashback, points, or miles — based on your spending.
• Balance transfer credit cards: These offer introductory low or 0% APRs on balances transferred from other cards. The reprieve from interest allows people to transfer higher-interest credit card debt and pay the balance down sooner. 
• Charge cards: These cards are typically for businesses and are technically not credit cards. They do not have a pre-set spending limit, and the balance must be paid in full each month.
• Store (or retail) credit cards: These are issued by retailers and can usually only be used at that specific store or the family of stores owned by their parent company. They tend to offer exclusive discounts and sales but typically have higher interest rates and little value outside the brand.

You can dive deeper into the types of credit cards here.