When it comes to finances, there's no one-size-fits all solution. That's why the question “How many credit cards should I have?” isn't so simple to answer. Most financial advisors agree that having multiple credit cards can be both good and bad for you—it all depends on how you use them.
On one hand, having more than one credit card can keep your credit line utilization low and offer perks like travel rewards and cash back. On the flip side, it might lower your credit score, which could make you less appealing to lenders.
At the end of the day, the key is finding a sweet spot where you can enjoy those benefits while maintaining your financial health. In other words, the ideal number of cards is different for each person. Below, we outline the pros and cons of managing multiple credit cards and assess just how many is too many.
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Benefits of having multiple credit cards
When people first think about owning multiple credit cards, debt often comes to mind—which makes sense because it means more ways to spend money. However, there are also some benefits to consider. According to Michael Ashley, a finance and investment expert and Founder of Ashley Insights, these are the perks of having multiple cards:
- Rewards increase: Some credit cards offer perks like travel points, cash back, or specific retailer discounts. By using more than one card, you can maximize these benefits.
- Financial flexibility: Instead of being stuck with just one card, you can spread out your spending across multiple cards (try to do it wisely, of course). “This allows you to handle unexpected expenses more effectively without maxing out any single card,” Ashley says.
- Higher overall credit limit: Multiple credit cards equals a higher overall credit limit. “This helps you maintain a low credit utilization rate and improve your credit score,” Ashley says. It's the opposite of what happens if you put all your expenses on one card.
Understanding the credit utilization rate
Your credit utilization rate is the percentage of the total available credit that you're currently using. FICO uses this rate as a factor when calculating your credit score. “Keeping this ratio below 30%, and ideally under 10%, can significantly benefit your score,” Ashley says.
For instance, if you have one card with a $3,000 limit and charge $1,500 each month, your utilization rate is 50%, which can hurt your credit score. Ideally, you'd want to keep your charges between $300 to $900.
But if you have three credit cards, each with a $3,000 limit, and split the same $1,500 across them (for example, $600 on card 1, $300 on card 2, and $600 on card 3), you can keep your utilization rate within the ideal range.
Of course, having multiple credit cards isn't the only way to lower your utilization rate—you can also reduce your spending. (Read this next: 6 Money-Saving Tips That Will Blow Your Mind)
Potential issues with having multiple credit cards
No surprise here: Having more than one credit card can lead you to serious financial problems—the biggest one being credit card debt. “It becomes harder to manage multiple cards,” Ashley says. “It increases the risk of missing payments and incurring late fees, which can hurt your credit score.”
Other potential issues involving multiple credit cards include:
- Overspending: If you're not organized with your finances and tend to shop a lot, having multiple credit cards available can lead to overspending. “It's easy to lose track of how much you're spending until the monthly statements arrive, which can result in debt accumulation,” Ashley says.
- No control over your finances: You could also max out your limits, and harm your finances. “It can be difficult to remember which card to use for specific purchases,” Ashley says. “This can result in higher interest rates and fees if you exceed credit limits.”
- Lower credit score: Applying for multiple credit cards and using them excessively can lower your credit score. “It can increase your overall debt and the number of hard inquiries on your credit report, which lenders may view as a sign of financial instability,” Ashley says.
- Higher fees to pay: Many credit cards, if not most, come with an annual fee. Premium cards typically have higher fees compared to regular ones. With several credit cards, you'll naturally have more fees to pay. When combined with charges from your expenses, this can easily eat into your income.
So, how many credit cards should I have?
There's no definitive rule for the number of credit cards you should have. It depends on your reasons for having them and how strong your finances are. “Having several cards can enhance your credit history over time, showing lenders that you can manage different types of credit responsibly,” Ashley says.
In general, having fewer than five credit accounts—which could be a mix of cards and loans—might be considered too few, Ashley says. ”It could result in a ‘thin file,’” he says, “making it difficult for scoring models to accurately assess your score—and making you less attractive to lenders.”
However, it's important to note that simply having credit cards won't necessarily benefit your credit history. If you have bad spending habits or struggle to pay off your credit card balances in full each month, it could cause the opposite effect.
Which brings us to the following question: If having fewer than five credit accounts is considered too few, how many is too many? Well, there's no magical number in this case either. The key is finding a limit that fits your lifestyle, income, and financial goals. “Ensure you can keep your credit utilization rate low and maintain a positive payment history,” Ashley says.
How can having multiple credit cards affect your credit score?
Having multiple credit cards can benefit your credit score if used wisely. But they can also harm your score if you don't manage your finances properly. It's important to avoid maxing out your cards and always pay off the full balances on time each month.
Lowering your credit utilization rate can boost your credit score, as this ratio makes up 30% of your overall score. On the flip side, missing payments can lead to a significant drop in your score. Payment history is the most critical component in the FICO scoring model, accounting for 35% of your credit score.
Your credit score is also affected every time you apply to open a new credit card account. “It results in a hard inquiry on your credit report, which can temporarily lower your score,” Ashley says.
This impact is minor and typically doesn't last long. However, the inquiries add up even if each credit card issuer is different. Submitting multiple applications within a short period of time could raise red flags and label you a credit risk—which could lower your credit score indefinitely. Ideally, wait at least six months after your last inquiry before reapplying for another new credit card.
Frequently asked questions
1. How many credit cards should I have in my 20s?
If you're in your early 20s, it's a good idea to have at least one credit card—as long as you can manage it responsibly. “This helps build a credit history, which is crucial for future financial opportunities like car loans or apartment rentals,” Ashley says.
Your first card will be like a training period; You'll learn how to handle your balance and overall finances. “As you become more comfortable with managing your credit, adding one or two more cards can be beneficial for increasing your overall credit limit and keeping credit utilization low,” he says.
2. Is it bad to have too many credit cards with zero balance?
Having too many credit cards with zero balance isn't inherently bad. However, it can still damage your credit history if you don't stay on top of potential fees. “Managing multiple accounts can become cumbersome, increasing the risk of missing payments if there are annual fees or other charges,” Ashley says. “Lenders might see the potential for quickly accruing debt as a risk, even with zero balances.”
As long as you manage them responsibly to avoid these potential pitfalls, he adds, it's OK to keep the credit cards active even if you're not currently using them. Otherwise, it might be best to close the accounts you don't see yourself needing in the future.
3. How many credit cards should you have on average?
The Credit Cards Statistics and Trends 2024, published by Forbes Advisor, shows that Americans have an average of three credit cards. However, finance experts agree that there's no set number of credit cards that's right or wrong. Ideally, having more than one credit card or credit account can help build a solid credit history.
4. How many credit cards should I have to build credit?
Having at least five credit accounts, between cards and loans, helps build a solid credit history. If you're still in your 20s, start with just one card until you're comfortable managing it. Then, you can add one or two more.
It's important to note that your payment history and credit utilization rate are the most crucial components of your credit score. Having multiple credit cards won't help if you're an overspender or can't pay the balances in full each month.
5. How many credit cards should I have for good credit?
To maintain good credit, it's more important to have a clean payment history and a credit utilization ratio ranging from 10% to 30%. If you have several credit card accounts but are unable to pay the balances in full monthly, it can jeopardize your credit score.
6. Are four credit cards too many?
Many people wonder if having four, five, or seven credit cards is too much. The answer is generally no. If you're organized, budget wisely, have good spending habits, and pay off your credit card balances in full each month, then having several cards isn't a problem.
However, if you rely heavily on them or are at risk of accumulating credit card debt, downsizing your wallet may be wise. Having debt on your payment history can significantly damage your credit score, making it more difficult to qualify for loans, rentals, and other financial opportunities.
7. Is it worth having multiple credit cards?
“Having multiple credit cards is worth it when you can manage them responsibly and benefit from their distinct advantages,” Ashley says. Credit cards advantages include miles, travel points, cash back, and discount at specific stores or retailers.