While there isn’t a set number of credit cards you should have, you’ll need at least one to build credit. Based on data from the credit bureau Experian, each American with a card owns an average of 3.1 credit cards. How you use each card is typically more important than how many accounts you have open as they can have a positive or negative impact on your credit score.
Decide how many personal and business credit cards you need by evaluating:
- Potential rewards: Most credit cards offer ongoing rewards in the form of travel miles, points, or cash back. Choosing credit cards that offer rewards in categories where you spend the most each month can help maximize reward earnings. To access rewards that apply to various spending categories, you’ll typically need more than one credit card.
- Benefits and perks: Similar to the variety of rewards cards offer, the additional features also vary from card to card. For example, travel credit cards offer travel-specific perks like free checked bags, whereas cash back credit cards don’t offer those perks. If you want access to a handful of benefits, you’ll need to consider opening multiple cards.
- Spending habits: If you have a lot of monthly expenses, one credit card may not provide enough available credit to meet your needs. You can either open another card to access more credit or request a credit limit increase from your issuer. If you choose to open another card, be sure to manage both cards responsibly and pay your bills on time.
- Ability to repay your debt: You should only choose to open more than one card if you know you can manage them responsibly and meet the monthly payment requirements. The more credit cards you open, the more potential debt you agree to take on.
Whether you decide to have one card or multiple cards, be sure to spend within your means and pay your bills on time to avoid any pitfalls that could affect your personal credit score.
Average Number of Credit Cards Per American Cardholder
According to Experian’s State of Credit 2019, every American with a credit card has an average of 3.1 cards. In fact, in Experian’s review of consumer credit card debt, as of Q2 2019, Americans have a total of 486 million credit cards. This includes 20.8 million new accounts that were opened in Q2 2019 alone. This is a 17% increase in new accounts when compared to Q2 2018.
How Many Credit Cards Is Too Many?
While there’s no true rule on how many credit cards is too many, you should never have more than you can manage responsibly. The number will vary based on your ability to afford the annual fees, meet the repayment terms, extract the most value from each card, and your overall spending habits.
Whether you have one card or five cards, it’s crucial to control your spending and repay your debt on time to maintain good credit standing. If you have trouble keeping up with your monthly payments, or if you struggle to remember the different due dates for each card, then you should consider only using one card.
When to Get Another Credit Card
- Access more buying power: If you don’t have access to enough credit through your current credit card, consider applying for a second card. Opening a new credit card can give you access to more buying power.
- Reduce your credit utilization ratio: An additional card will increase your overall available credit, which will help lower your overall credit utilization ratio. Lowering your credit utilization ratio can improve your personal credit score.
- Earn a sign-up bonus: Some issuers offer lucrative introductory rewards and sign-up bonuses that can provide a handful of bonus points or cash back. Take advantage of these offers if you can hit the minimum spending requirement naturally. However, this spending requirement shouldn’t be an excuse to spend beyond your means.
- Receive an introductory 0% APR offer: It’s good to get another credit card if you want to take advantage of an introductory 0% APR offer. 0% APR credit cards can help you finance purchases or pay off other high-interest credit cards with no interest for a limited time period.
How Multiple Cards Can Impact Your Credit
The way you manage your credit cards will have more impact on your credit score than the number of credit cards you have. It’s important to avoid credit card mistakes, such as using too much of your limit or defaulting on payments, to protect your credit score and maintain good credit standing.
Credit cards can affect your credit score by:
- Changing your credit utilization ratio: The more credit cards you have, the higher your total available credit will be. Depending on how much credit you use, you’ll either increase or decrease your credit utilization ratio. A ratio above 30% can hurt your credit while a ratio below 30%, but above 0% can help build your credit.
- Increasing your debt potential: With every credit card you open, you increase your chance of taking on more debt because you gain access to more credit. If you don’t use your cards responsibly, you may fall into a debt trap and hurt your personal credit score.
- Requiring a hard credit check: Most issuers will run a hard credit check when you open a new account. Hard inquiries can damage your credit score between one to five points for one year. Be sure to spread out your applications to reduce the negative impact they may have on your credit score.
- Closing an existing account: The average age of your credit history is a key factor that makes up your credit score. If you close an old account, it can harm your credit. Creditors like to see a long and stable credit history, so keeping a long-term account open even if you don’t use the card can help.
Building good credit starts with self-discipline and your ability to control your expenses. While having multiple cards can help improve your credit, you also run the risk of getting into more debt if you don’t use your cards responsibly. However, if you have one card and use it properly, it’s enough to build your credit.
Benefits of Multiple Credit Cards
- Boost your credit score: Having multiple credit cards can help improve your credit score by increasing your credit limit, which lowers your credit utilization ratio. However, an increased credit limit does not guarantee a low credit utilization ratio. You’ll still need to maintain low balances and keep your ratio below 30%.
- Help diversify and maximize rewards: Different credit cards pay rewards in different spending categories. If you have more than one type of credit card, you’ll have an opportunity to earn rewards in a variety of categories, like on groceries or United States streaming services, which can help maximize your rewards.
- Access to additional credit: When you have more than one credit card, you give yourself access to additional credit you can use as needed. Plus, it helps to have a backup credit card in case one gets lost or stolen.
Drawbacks of Multiple Credit Cards
- Difficult to manage several cards: Managing multiple accounts can be challenging for some. You’ll need to monitor your credit usage, due dates, and make sure you don’t fall behind on monthly payments to avoid hurting your credit score.
- More potential to sink into debt: If you don’t have self-control when it comes to spending, a larger available credit limit will give you more opportunity to sink into debt. If you decide to open more than one card, be sure only to spend what you can afford.
- Potential annual fees: Several credit cards charge annual fees, so owning more than one card means you may need to pay multiple annual fees. Calculate the cost of owning multiple cards to ensure the annual fees don’t outweigh the benefits and rewards.
The number of cards that’s best for you depends on your circumstances. However, you’ll need at least one card to build your credit profile. If you can control your spending habits, having multiple cards can be an advantage and also help improve your credit score.