How Many Credit Cards Should You Have?

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How Many Credit Cards Should You Have?

Figuring out how many credit cards belong in your purse or wallet can give you a headache. As new offers keep popping up, it can be tempting to want to take advantage of them all. Not to mention, there are cards for many different things. There's a card to target your favorite hotel chain, one to maximize airline miles, one that earns you points when spending at NFL games and even one that offers you cash back on your grocery purchases.

With this variety of credit cards, filling your wallet with plastic can become too easy. So, how many credit cards should you have?

According to Experian's "Credit Card Debt in 2021" report, as of the third quarter, the average U.S. citizen has 3.84 credit cards. In addition, Experian's Q2 2023 Consumer Credit Review shares that people carry an average outstanding balance of $6,365. Overall, the Federal Reserve's October 2023 G19 report showed that total outstanding revolving credit stood at $1.3 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 can take several days to receive a replacement card.
  • You can have a credit card strictly for shopping online, which can help you track your spending.
  • 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 offer. 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 is more likely you will pay your bill on time. With one credit card, you only have one provider to consider; thus one bill you need to pay each month. Not to mention, on-time payments is a big factor in credit scoring and accounts for 35 percent of your credit score.
  • You are not as likely to build up debt. You are more aware of your spending when you only have one account. With multiple credit cards, keeping track of your spending can be more challenging since you have more credit available to you and are likely not 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 or buy a new home.
  • 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. That can be an issue if you have multiple cards from multiple banks.
  • It is easier to prevent fraud. It is simpler to check one account for fraud regularly than it is ten.

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.

Some people believe you can never have too many credit cards. Depending on the individual, this can be true somewhat. Each credit card you have in good standing will increase your credit score and have a positive impact on your credit history.

However, it is possible for some people to have too many cards. If you tend to overspend with multiple cards, struggle to manage your accounts or incur much debt, numerous cards are too many.

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