How Many Credit Cards Should You Have?

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How Many Credit Cards Should You Have?

As new credit card offers pop up, it can be tempting to want to take advantage of them. Not to mention, there are many different benefits available, depending on the card you choose. There are cards for your favorite hotel chain, maximize airline miles, or even offer you cash back on your grocery purchases.

With this variety of credit cards, how many credit cards should you have?

According to Experian's A Look at U.S. Consumer Credit Card Debt report in November 2019, the average U.S. citizen has an average outstanding credit card balance of $6,194. Overall, The Federal Reserve's October G19 report showed total outstanding credit balances at $1.088 trillion.

Advantages of More Cards

Here are some advantages of having multiple credit cards:

  • If you have a stolen or lost credit card, having a second card available can help since it may take several days to receive a replacement card.
  • When traveling, having multiple cards will allow you to have a backup card if your primary credit card is not accepted at your destination.
  • You can transfer balances to a new credit card, thereby lowering your interest rate or taking advantage of a promotional rate.
  • You have the opportunity to use different cards to take advantage of the different rewards each offers. For instance, one card could offer you purchase protection or better product warranties, while another card may earn you points to use for travel purchases or cash back rewards.

Advantages of Fewer Cards

Some advantages of having fewer cards include:

  • With fewer cards, it's easier to make sure your bill is paid on time since you would need to keep track of fewer due dates. Making your payments on time is a big factor in credit scoring.
  • You are less likely to build up debt. You are more aware of your spending when you only have one or two accounts. With multiple credit cards, keeping track of your spending can be more challenging since you have more credit available to you and are may not be aware of each balance you have on each card.
  • You will have fewer hard inquiries that can impact your credit score. Each time you apply for a new card, the bank will check your credit history, and with each view, it can lower your credit score. Even though this is temporary, the consequences of a lower score can range from minimal to substantial, depending on your score. That can impact your ability to take out loans, buy a new home, or request other credit.
  • It may be easier to maximize rewards. When you only have one card, your main focus will be to rack up points or gain cash back from that card. All your points will build up from the same system.
  • It is easier to prevent fraud. It is simpler to check one account for fraud regularly than it is multiple.

Weighing It Out

So, how many cards should you own? That will depend on your specific situation. It may be best to start with one credit card with a lower credit line and work your way up to a few cards once you build up credit if you'd like.

Keeping the credit cards you have in good standing can increase your credit score and have a positive impact on your credit history.

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