Credit cards provide a wealth of benefits, like the potential to boost 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 2020 Experian survey. According to the survey, 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 big 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:
- Higher 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.
How often should you apply for a new credit card?
Each time you apply for a credit card, the lender performs a hard inquiry. Too many inquiries can signal to banks that you are a credit risk. A hard inquiry on your credit report can cause your credit score to drop, but multiple credit inquiries can be especially damaging because they raise a red flag to lenders.
As a result, even if your credit score doesn’t drop by much, future creditors may offer you higher interest rates or deny your application altogether because of the added risk. In general, it’s best to wait at least 90 days between new credit applications -- although six months is ideal.
How many credit cards is too many?
There isn’t a hard and fast rule for how many credit cards is too many. Your credit score won’t plummet once you obtain a certain amount of credit cards.
However, it’s important to have a solid mix of account types. Too few accounts make it difficult for scoring models to render a score. With a thin file, credit actions can have a larger effect on your score than if you had more accounts.
On the other hand, if having lots of cards makes your life complicated and you miss a payment, that can negatively impact your credit score, too.
FAQs
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.
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.
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 isn’t strong enough, take steps to improve 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.
The bottom line
Credit cards can increase your credit score boosting and earn you rewards. But not every card is equally appropriate for every transaction. Depending on your spending habits and financial situation, you may find it makes sense to have multiple credit cards -- or you may not.
There are both advantages and disadvantages to having more than one credit card, so you should weigh the pros and cons carefully before making a decision.
The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.