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How many credit cards should you have?

While there is no magic number, there are rules of thumb to follow.

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Credit cards provide a wealth of benefits, like boosting your credit score and offering cash back or other rewards. But not every card is equally appropriate for every transaction. Depending on your spending habits, shopping preferences and financial situation, you may find it makes sense to have multiple credit cards -- and use them strategically to take advantage of different perks and benefits

Americans have an average of 3.84 credit cards, according to a fall 2020 survey by the credit bureau Experian. Older people tend to have more credit cards, with baby boomers and Gen Xers averaging 4.61 and 4.23 credit cards, respectively. 

While there's no absolute number for how many credit cards you should have, as you expand your collection the risks increase right along with your overall credit limit. Read on for guidance on how to manage your credit card portfolio.

What's the 'right' number of credit cards?

There's no one-size-fits-all answer to the question of how many credit cards you should have. Instead, consider several factors to determine the number that is right for you:

  • Spending habits: If you want to maximize your credit card rewards, it can make sense to open multiple credit card accounts to take advantage of their different rewards programs.
  • Credit score: The more credit cards you have, the more available credit you have to work with. If you're putting all of your spending on just one card, it could lead to a high credit utilization rate -- the percentage of your credit limit that you're using -- which could damage your credit. If you're using a lot of your available credit, you could get dinged on your credit score. Adding more cards to the mix could reduce your overall utilization rate and help your credit score.
  • Organizational skills: Having multiple credit cards means keeping track of transactions and monthly payments across multiple accounts. If you accidentally miss a payment, it could damage your credit score -- at the minimum, you'll get slapped with a late fee and interest charges.

If you're thinking about adding another credit card to your wallet, carefully consider your reasons and the potential issues that you'll encounter by adding another account.

Advantages of having more than one credit card 

There are several reasons to consider using more than one credit card:

  • Boost your credit score: The more credit accounts you have and use responsibly, the better it will be for your credit score. Also, the more available credit you gain through multiple credit cards, the lower your credit utilization rate could be if you do a good job managing the balances, which can positively affect your score.
  • Maximize rewards and perks: It's rare to find two credit cards that offer identical rewards and benefits. One card may offer outsize rewards on everyday spending categories like groceries, dining and gas but fall short on perks a second card provides. Depending on how you spend your money, supplementing one or more tiered rewards cards with solid rewards rates can help you maximize the perks you earn.
  • More flexibility when traveling: If you're traveling abroad, you may have trouble using an American Express or Discover card, as they aren't widely accepted internationally. Having a backup Visa or Mastercard credit card can make international travel much easier. Also, if your favorite card charges a foreign transaction fee, which can range from 1% to 3% of each international purchase, it can help to have a second card that waives that fee. 

Risks of having more than one credit card

While there are some clear benefits to having more than one credit card in your wallet, there are also some possible drawbacks and red flags to keep in mind:

  • More potential for debt: If you struggle with overspending, adding more credit cards to the mix can do more harm than good. Consider restricting the number of cards you have if you believe more available credit will tempt you to spend more.
  • Harder to keep track: The more credit card accounts you open, the harder it will be to keep track of everything. You can lighten your load by setting up automatic payments and using a budgeting app to track all transactions in one spot, but even then, something may slip through the cracks. Plus, with multiple cards, it can be a challenge to remember which one to use to maximize your rewards and benefits with each purchase.
  • May hurt your credit: An additional hard inquiry on your credit report won't impact your credit score by much -- according to FICO, an inquiry typically knocks fewer than five points off your score. But if you apply for multiple credit cards in a short period, it can have a compounding negative effect on your credit. 

FAQs

Does having multiple credit cards affect my credit score?

Using multiple credit cards can impact your credit score in a few ways. For starters, every time you apply for a new credit card, the hard inquiry can knock a few points off your credit score. Opening several accounts at once can also decrease your average age of accounts, which is one of the measures of your creditworthiness, so that can negatively impact your score.

That said, managing more than one credit account responsibly -- using your cards regularly, keeping your balances low relative to their credit limits and paying your bills on time every month -- can do more to improve your credit than if you used just one card.

What happens if I apply for another card and get denied?

Applying for a credit card will typically impact your credit score because of the resulting hard inquiry on your credit reports. However, getting denied doesn't affect your credit score in any way.

If you do get denied, wait before applying for another card. The credit card company should send you a letter explaining why you were denied. Depending on the reason, you may be able to make some improvements to your credit history to boost your chances of approval when applying for a different card in the future.

How do I choose the right credit card?

There are several types of credit cards to pick from and it can be a challenge to determine which one is the best credit card for you. Start by considering your credit score -- the cards that offer the best rewards and perks are reserved for those with good or excellent credit, which generally starts at a FICO score of 670. If you have your heart set on a specific card and your credit is less than stellar, take time to boost your score before you apply.

Next, think about what type of features you want in a card. If you want rewards, would you prefer cash back, points or miles? While cash-back credit cards offer more flexible rewards, many travel credit cards offer big sign-up bonuses and valuable points or miles. And of course, look at which rewards card would help you earn the most based on how you spend your money.

Finally, think about the other features you want in a credit card, such as travel perks beyond points and miles, insurance protections or 0% APR promotions. Shop around and compare multiple credit cards to determine which one can provide you with the most value.