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How Many Credit Cards Should I Have? | Credit Cards

Key Takeaways

  • If you’re thinking about adding another credit card to your wallet, consider whether you’re looking to maximize rewards or you just want simplicity.
  • Having multiple credit cards could potentially make it difficult to keep track of payments and might lead to late fees, debt or high interest charges.
  • On the other hand, having many credit cards will increase your credit limit, which will lower your credit utilization ratio and raise your credit score.

How many credit cards you should have depends on your spending habits and financial goals. “It depends on the type of person. … It really comes down to if that person is able to keep track of all of them,” says Vince Darling, a certified financial planner at the StoneBridge Group, which provides financial planning services. “I’ve talked to some people who have none and others who have more than 10.”

He says using two or three is sufficient. But there’s no one-size-fits-all answer. Having two cards – for example, a business and personal card – could help you keep those two expenses separate. Another advantage of having multiple cards, says Darling, is that it can help you take advantage of different rewards programs.

But you should be mindful of the potential disadvantages of adding another credit card to your wallet, like missing a payment and damaging your credit.

How Many Credit Cards Are Ideal?

While there’s no perfect answer, it may depend on whether you want simplicity or maximum rewards, says Jeremy Eppley, founder and certified financial planner at Silverstone Financial, an investment management company. He recommends having at least two credit cards if you prefer simplicity: a general credit card that earns a flat reward on every purchase and a credit card that allows you to earn rewards in specific spending categories, like groceries.

Why Have Multiple Credit Cards?

Having multiple credit cards can help you take advantage of the perks like sign-up bonuses and ongoing rewards like annual statement credits. Even if a card charges an annual fee, the rewards you earn may offset it.

However, keep in mind that if you don’t pay your balance in full each month, the interest cost can exceed the value of the benefits you receive.

Benefits and Drawbacks of Having Multiple Credit Cards

Benefits

  • Rewards. “The advantage of having multiple credit cards earning rewards in different categories is that you can maximize your cash back or points earned,” says Eppley.
  • Separate your expenses. Darling says using a different card for certain expenses can make it easier to keep track of your spending in various categories, and this can make accounting easier when tax time comes.
  • You will need multiple credit lines if you’re in the market for a home. Most lenders require at least three open credit accounts if you want a conventional mortgage.
  • You can improve your credit score. The new card will increase your overall credit limit, and if your spending stays the same, your credit utilization ratio – how much of your available credit you’re using – will improve. Credit utilization is a key factor in determining your FICO score.

Drawbacks

  • Temptation to overspend. Having several cards in your wallet can lead to a cycle of debt if you spend more than you can afford to pay back.
  • Hard credit pull. Each time you open a new credit card, it generally results in a hard credit inquiry that’s added to your credit report, which may temporarily ding your credit score.
  • More difficult to manage. Managing several credit cards can be difficult. “You have to make sure that you are keeping track of your spending and paying your credit card bill for multiple cards,” says Eppley.
  • Increased risk of credit card fraud. Opening several cards might also increase your risk of becoming a victim of fraud. Darling says he always tells his clients to review their statements each month to help prevent this.

Will Multiple Credit Cards Hurt My Credit Score?

Having multiple credit cards can be negative or positive. When you apply for a credit card, an issuer performs a hard credit inquiry to review your credit history. As a result, your credit score can temporarily drop by up to five points.

Also, if you have trouble juggling multiple cards and end up making a late payment or defaulting, it can cause serious damage to your credit score.

A potential advantage of having many cards is that it increases your available credit. Having an increased credit limit can lower your credit utilization ratio and boost your score.

Paying your credit card bills on time can also help you add positive credit history to your credit reports and strengthen your credit profile.

Types of Credit Cards

Several types of credit cards exist. Here are a few different options to choose from:

Factors to Consider When Choosing a Credit Card

  • Annual fees. A card with an annual fee is only worth it if you can earn enough rewards to offset the fee. “Unless you have very high income and spending, I would avoid credit cards with an annual fee,” says Eppley. “There are plenty of great no-annual-fee credit cards out there with great rewards.”
  • Foreign transaction fees. If you travel outside of the U.S. often, consider getting a card that doesn’t have a foreign transaction fee so you can save money.
  • Rewards. Consider choosing a credit card that allows you to earn rewards that best match your spending behavior. For example, if you spend a lot of money on groceries each month, look for a credit card that offers a high percentage of cash back rewards for that spending category.
  • Reputation. Before you apply for a card, read reviews online. Eppley says to avoid credit card providers that have hidden fees and a bad reputation.

Tips for Managing Multiple Credit Cards

If you’ve decided you want multiple credit cards, here are a few tips for keeping up with them:

  • Enroll in autopay. Signing up for autopay can help you avoid late fees. If you can, pay your statement balance in full each month to avoid paying interest.
  • Use an expense tracker app. Eppley recommends using an app to keep track of your spending across many credit cards.
  • Manage rewards with a credit card app. If you have several cards that offer rewards, consider using a credit card app to help you keep straight what’s available. These apps can enable you to figure out what’s the best card to use in certain scenarios in order to maximize your rewards.

Sarah Goldberg
Sarah Goldberg

Sarah is a seasoned financial market expert with a decade of experience. She's known for her analytical skills, attention to detail, and ability to communicate complex financial concepts. She holds a Bachelor's degree in Finance, is a licensed financial advisor, and enjoys reading and traveling in her free time.

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