How Many Credit Cards Should You Have?

Close-up of a woman getting a credit card out of her wallet.
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There’s no universal answer when it comes to how many credit cards you should have. Like most financial decisions, the correct number of credit cards depends on your financial profile, which is based on your income and financial objectives.

Ultimately, many different factors will help determine how many credit cards you should have, and when you should or shouldn’t open them. This guide covers some of the major factors to consider.

Should You Have More Than One Credit Card?

You should have more than one credit card if you are unable to cover your financial needs with only one. However, how you manage debt and use your credit cards is much more important than how many cards you have.

It’s likely that at least some of your credit cards have annual fees; if you have several cards, you can easily pay thousands of dollars annually just in credit card fees. Another factor with having a lot of open credit lines is 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 severe financial damage.

How Often Should You Open a New Credit Card Account?

If you’re looking to maintain your credit score, you should try to avoid opening new cards unless there’s a real need. Every time you apply for credit, your score lowers by a few points. Perhaps even worse, the more new accounts you try to open, the more it seems to creditors that you are desperate for a loan, making it increasingly unlikely that you’ll be approved.

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Some major credit card issuers publish their credit card account policies. 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.

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

Opening a new credit card account might initially ding your credit score by a few points but closing a credit card account can hurt your credit score as well. 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 credit age could drop significantly, which typically hurts your score.

Also, if you carry balances on any of your cards, closing an account can increase your credit utilization ratio, as your total available credit will decrease. This could have an even more significant negative effect on your credit score.

Good To Know

Rewards cards typically offer a variety of perks, from signup bonuses to things like airline freebies and complimentary nights at choice hotels. Using these cards wisely can indeed be beneficial.

Be sure to read all the fine print before signing up for a rewards credit card. Many have astronomical annual fees and high-interest rates on outstanding balances. Unfortunately, for some cardholders, the costs far outweigh the benefits.

When Should You Open a New Credit Card?

In some cases, opening a new credit card account can be useful for building or rebuilding your credit. It won’t happen overnight, but here are some reasons why opening a new credit card account occasionally can boost your credit score.

  • Diversity on your credit report. Revolving accounts and installment loans can be a good credit-boosting mix.
  • Longer payment history. Payment history makes up 35% of your FICO score. 
  • Decreased credit utilization. New accounts tend to lower your overall credit utilization rate, which is a plus for good credit.
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Try not using credit for a while and pay for purchases with cash or a debit card before opening a new credit card account. Good credit utilization, which is your monthly use of your available credit, is one of the most important factors in calculating your credit score. 

For example, you have one credit card with a $2,000 limit and you make three purchases totaling $1,500. This results in a credit utilization of 75%, which is much higher than the recommended 30% rate. It would be better to use multiple credit cards that each have a $2,000 limit and spread those $1,500 purchases across the cards to keep your credit utilization under 30%. 

How Can You Decide Whether To Open a Credit Card or Not?

Your financial situation will dictate how much credit you should take on. Think about your everyday purchases. Select a card that offers rewards on things you regularly purchase, and that will help you steadily establish good credit.

For big-ticket items and long-term goal purchases, you may want to add a credit card or two for diversification and to build your credit quicker. Look for cards offering loyalty rewards points and low annual fees to help you pay off debt regularly and on time.

Having more than one credit card may not be best if your spending habits are poor, you’re already in debt and you don’t pay your card balances off every month. Although only one card is necessary to begin taking on credit responsibility, responsible behavior with additional cards increases your creditworthiness gradually and over time.

Final Take

There are pros and cons to having multiple credit cards. When asking yourself how many credit cards should you have, remember that responsible management is the key to successfully using them. If you think you’ll be tempted to max them out, then one card may be better for you. Remember to review your current finances and consider your spending habits before opening a new credit card account.

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Here are the answers to some of the most frequently asked questions regarding credit cards.
  • How many credit cards should you have for good credit?
    • There isn’t a set number of credit cards that will equal good credit, the more important factor to your credit is how you manage your credit card accounts. Making sure you make on-time payments and keeping your credit utilization under 30% are some very important factors to keep in mind.
  • How many credit cards should the average person have?
    • The average person typically has three credit card accounts. Whether that is the right amount for you will depend on your unique financial situation.
  • Is three credit cards too many?
    • There is no specific answer to how many cards will be too many for you. If you can manage your account balances, three may be the right fit for you.

John Csiszar contributed to the reporting for this article.

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