How Many Credit Cards Should You Have?

How Many Credit Cards Should You Have

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Credit cards can be a valuable financial tool when used responsibly. They can provide flexibility in your budget, allow you to earn rewards on your spending, and even help you build good credit. However, determining the optimal number of credit cards to have can be a bit of a puzzle. In this article, we will explore the factors to consider when deciding how many credit cards you should have and how to manage them effectively.

The Average Number of Credit Cards

According to Experian, the average American has approximately 3.84 credit cards with an average credit limit of $30,365. This number may vary depending on factors such as age and financial goals. For example, Gen Z consumers tend to have around 2.1 credit cards, while others may prefer having multiple cards for various purposes such as personal, business, or travel expenses.

Understanding Your Personal Needs and Spending Habits

When determining the number of credit cards you should have, it’s important to consider your personal needs and spending habits. Some individuals find it beneficial to have only one card to build credit history, while others may prefer having multiple cards to take advantage of specific benefits or rewards programs.

John Cabell, managing director of Payments Intelligence at J.D. Power, explains, “Some consumers use only one card so they can build credit history, but other consumers may want many different cards for personal, business, travel, airline status, et cetera.”

Striking a Balance: How Many is Too Many?

While having multiple credit cards can offer advantages, it’s crucial to strike a balance and not go overboard. The number of cards you should have should be based on how well you can manage them. It’s essential to keep track of your payment due dates and ensure you can afford to pay off the balances each month. Remember,  are valuable assets as long as you make on-time payments and avoid carrying balances from month to month.

If you are unable to manage multiple cards, you could find yourself overwhelmed by unmanageable debt, high-interest rates, and fees. On the other hand, effectively managing your cards can have a positive impact on your credit score over time.

The Impact of Credit Cards on Your Credit Score

Your credit cards play a significant role in determining your credit score. Several factors contribute to your FICO score, including payment history, amounts owed, credit history length, credit mix, and new credit. It’s important to understand how these factors are influenced by your credit card usage.

Payment History

One of the most critical factors in your credit score is your payment history. Credit card issuers like to see a track record of on-time payments. Consistently making payments by the due date demonstrates your ability to manage your debts responsibly.

Amounts Owed and Credit Utilization Ratio

The amounts you owe on your credit cards also impact your credit score. Credit utilization ratio refers to the amount of debt you have compared to your total credit limit. It is generally recommended to keep your credit utilization below 30% of your available credit. For example, if your credit limit is $10,000, you should aim to keep your balance below $3,000.

Having multiple credit cards can help you maintain a low credit utilization ratio if you use them responsibly. By spreading your expenses across multiple cards, you can reduce the overall percentage of credit utilized.

Credit History Length and Credit Mix

Having a long credit history and a diverse mix of credit products can positively impact your credit score. Responsible management of multiple cards can contribute to a longer credit history and demonstrate your ability to handle different types of credit.

New Credit

Each time you apply for a new credit card, the financial institution conducts a hard inquiry, which temporarily lowers your credit score. Applying for multiple cards within a short period can make you appear as a compulsive borrower and may negatively affect your credit score. It’s important to space out your credit applications and consider the potential impact on your credit score.

On the other hand, if you are approved for a new credit card, it can positively impact your credit mix and credit utilization ratio. It introduces a new type of credit into your portfolio and increases your available credit. However, it’s crucial to make timely payments and avoid accumulating excessive debt on the new card.

Benefits of Multiple Credit Cards

While managing multiple credit cards may not be suitable for everyone, there are certain benefits to consider.

Rewards and Benefits

One of the main advantages of having multiple cards is the potential to maximize rewards and benefits. Different cards may offer various rewards programs tailored to specific spending categories such as dining, travel, or fuel purchases. By strategically using different cards for specific expenses, you can maximize the value and savings from these rewards programs.

John Cabell suggests, “Using a card that offers cash back on dining and restaurant purchases, and a card affiliated with a service station retailer for purchasing fuel can be a smart way to maximize card value.”

Separating Personal and Business Expenses

If you run a business or have separate personal and business expenses, having multiple cards can help you keep your finances organized. By using one card for personal expenses and another for business-related transactions, you can easily track and manage your spending in each category.

Tailoring Cards to Your Spending Patterns

Analyzing your spending habits can help you determine the types of credit cards that best suit your needs. If you frequently shop at specific retailers or have recurring expenses in certain categories, you can choose cards that offer rewards or cash back for those specific purchases. This tailored approach can help you save money in the long run.

When to Exercise Caution

While there are advantages to having multiple credit cards, it’s important to exercise caution and consider the following scenarios where it may be best to refrain from getting a new card.

Struggling with Debt Management

If you are already struggling with debt management, adding another  card to the mix could worsen the situation. It’s important to prioritize managing your existing debts and refrain from taking on additional credit until you have regained control of your finances.

Recent Hard Inquiries

Each time you apply for a new credit card or other form of financing, a hard inquiry is recorded on your credit report. Applying for multiple lines of credit within a short period can negatively impact your credit score. Lenders may perceive you as a high-risk borrower, making it more challenging to secure financing in the future.

Pending Loan Applications

If you plan to apply for a loan in the near future, it’s advisable to hold off on acquiring new credit cards. Lenders assess your credit report and score when evaluating loan applications. Maintaining a clean  report and a high credit score can significantly increase your chances of obtaining favorable loan terms.


Determining the optimal number of credit cards to have is a personal decision that depends on your financial goals and spending habits. While the average person holds around 3.84 credit cards, it’s crucial to consider your ability to manage multiple cards effectively. Responsible card usage can help you build a strong credit history, maximize rewards, and benefit from financial flexibility. However, it’s important to exercise caution and avoid taking on more credit than you can handle. By understanding your financial needs and goals, you can make informed decisions about the number of credit cards that best suit your circumstances. Remember to always prioritize making on-time payments, keeping your credit utilization ratio low, and managing your debts responsibly to maintain a healthy credit score.

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