How Many Credit Cards Should You Have? And More Credit Card Questions Answered

Close-up of a woman getting a credit card out of her wallet.
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There’s no one-size-fits-all answer when it comes to how many credit cards you should have. Like all financial decisions, the right number of credit cards depends on your personal finance profile, from your income and age to your financial objectives and free cash reserves.

Important: Why It’s a Bad Move To Use the Same Credit Cards Indefinitely
See: 10 Things to Do Now If You Have a 500 Credit Score

However, one thing is for certain — you should never open any credit card account unless you have the financial means to pay it off in full before interest charges accrue. Beyond that, there are a number of different scenarios that will help determine how many credit cards you should have, and when you should or shouldn’t open them. Here’s a look at just a few.

How Many Credit Cards Should You Have?

The simple answer to this question is you should only have as many credit cards as you need. While some view having numerous credit cards and a large amount of available credit as a badge of status, there’s really no reason to have more credit than you need.

For starters, it’s likely that at least some of your credit cards have annual fees; if you have a large amount of cards, you can easily pay thousands of dollars annually just in credit card fees. Another danger is that with a large amount of open credit lines, you’ll be tempted to use them. If you don’t have adequate financial discipline, your showpiece portfolio of credit cards could lead to some serious financial damage.

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How Often Should You Open a New Credit Card?

If you’re looking to raise or maintain your credit score, you should try to avoid opening new cards unless you absolutely need one. Every time you apply for credit, it dings your score by a few points. Perhaps even worse, the more new accounts you try to open, the more it seems to creditors like you are desperate for a loan, making it increasingly unlikely that you will be approved.

Some credit card issuers actually publicize their stance regarding this subject. JPMorgan Chase, for example, has a well-known “5/24” rule which states that you absolutely won’t get approved for a new credit card if you’ve applied for five accounts in total over the past 24 months. The bottom line is that you should avoid opening new credit cards unless there’s a compelling reason.

Read: The Top Things To Consider Before Applying For a New Credit Card

How Does It Affect Your Credit Score To Open or Close a Credit Card Account?

As discussed above, opening a new credit card account might initially ding your credit score by a few points. But closing a credit card account can also be damaging. For starters, once that account falls off your credit report, it affects the average age of your credit. If you’ve had a card open for 40 years and then close it, your average age of credit could drop significantly, which could hurt your score.

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Also, if you carry balances on any of your cards, closing an account will increase your credit utilization balance, as your total available credit will drop but your outstanding balances will remain the same. This could have an even more significant negative effect on your credit score.

What Should I Look Out for With Rewards Credit Cards?

Rewards credit cards skyrocketed in popularity before the pandemic struck, and as the economy reopens, they are making a comeback. Rewards cards typically offer a wide variety of perks, from large signup bonuses to perks like free baggage on flights and complimentary hotel stays. If you can use these cards wisely, they can indeed provide numerous benefits.

However, you should be sure to read all the fine print before you sign up for one of these enticing cards. Many have annual fees in the hundreds of dollars, and most have high interest rates on outstanding balances. For many card holders, the costs actually outweigh the benefits.

Find: 10 Signs That It’s Time To Ditch Your Credit Card

When Should I Avoid Opening a Credit Card Account?

There are numerous examples of when you should avoid opening a credit card account. If you already have more credit cards than you know what to do with, adding more to your portfolio is usually imprudent. The same is true if you have a hard time managing your financial life or are an impulse spender.

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If you view credit cards as some type of “reward” instead of a financial tool, you might be a prime candidate for runaway spending. The bottom line is that if you can’t use cards responsibly and get more out of them than they cost, credit cards are not the right financial solution for you.

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About the Author

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.
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