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How Many Credit Cards Should I Have? — 7 Factors to Consider

According to the American Bankers Association, there were 365 million open credit accounts in the United States at the end of 2020, as reports. That’s more than one credit card for every American and nearly two for every American adult. 

But credit card usage patterns vary widely. Plenty of consumers make do with a single credit card. Others have two. Some have wallets brimming with five or more.

In other words, the question “How many credit cards should I have?” has many possible answers. The number that works best for you depends on your budget and spending power, lifestyle and spending needs, credit history and score, and personal tolerance for using credit cards.

How Many Credit Cards Should I Have? — 7 Factors to Consider

To determine how many credit cards you should have, you need to consider two different types of factors. 

The first relates to your capacity to obtain and manage new credit cards, as determined by your credit score, credit history, and ability to manage your personal finances. The second relates to the credit cards themselves — their costs, benefits, and suitability for your spending needs. 

1. Your Credit Score

Your credit score doesn’t directly determine how many credit cards you should have, or even how many you can have. 

However, your credit score does play a big role in determining the types of credit cards you’re likely to qualify for. And if your credit is impaired or you don’t have much credit history to speak of, that’s a signal that you’re not ready to load up on credit cards.

These are the five key factors influencing your FICO score, the most common consumer credit scoring model.

Payment History & Patterns

This is the single most important FICO score determinant, counting for 35% of your score. The longer your record of timely balance payments, and the fewer and farther between your missed payments, the lower your apparent credit risk. Likewise, a pattern of frequent or recent missed payments is a red flag for the FICO model.

The best way to keep your payment history on track is to limit your overall credit utilization, which may mean limiting the number of active credit card accounts you maintain. You shouldn’t apply for a new credit card unless you’re sure you can handle the additional payment.

Credit Utilization Ratio

This is the ratio of your cumulative balance to your total available credit, or credit limit, across all active credit accounts. Your credit utilization ratio counts for 30% of your FICO score.

A higher credit utilization ratio implies greater credit risk, so it’s important to keep yours in check. Under 30% is ideal, though there’s no universally accepted benchmark.

The surest way to control your credit utilization ratio is to use credit carefully. If you have just one or two credit card accounts and a low cumulative credit limit, restrict your credit card charges to particular expenses or spending categories, such as monthly utility bills. 

As your credit improves, you can open new credit card accounts to raise your cumulative credit limit. This reduces your credit utilization ratio without self-imposed spending constraints. But you should only do it when you’re ready for the additional responsibility.

Average Age of Credit Accounts

Think of this as your credit use track record. Clocking in at 15% of your FICO score, this metric measures the age, from opening date to present, of each open credit account.

All else being equal, an older account mix implies lower risk than a younger account mix. This means you should avoid closing old credit card accounts without good cause. Even if you don’t use an older account regularly, keeping it open and more or less dormant is a boon for your credit score. And that’s an argument in favor of maintaining rather than paring back your credit card lineup.

Frequency & Timing of New Credit Applications

Your credit application pattern counts for 10% of your FICO score. A high application rate implies a higher credit risk, regardless of other mitigating factors. In other words, your credit score is likely to decline when you apply for a new credit card — or submit any other application that requires a hard credit inquiry.

Your credit score is therefore better served by adding credit cards slowly and steadily, even if you can afford to scale up faster.

And you might not have a choice. Some credit card issuers go so far as to place a hard cap on the number of new accounts you can open in a specific period of time. 

Credit Mix

Credit cards aren’t the only accounts that factor into your credit score. Your credit mix counts for 10% of your total credit score. 

The FICO model rewards diverse credit portfolios featuring multiple account types, such as credit cards, unsecured personal loans and personal lines of credit, and secured debt like auto loans and mortgages.

This means you don’t need to rely only on credit cards to build a strong credit profile. As long as you have or recently had other account types open, you can limit your credit card portfolio to one or two cards and still maintain excellent credit.

2. Credit Card Fees

Many premium credit cards charge annual fees. It’s difficult to avoid these fees, and if you can’t negotiate waivers with your credit card company, paying an annual fee increases the cost of keeping a particular card in your wallet.

Some types of credit cards are more likely than others to charge annual fees. Premium travel rewards credit cards such as the Chase Sapphire Reserve Card and the Capital One Venture X Card both charge eye-popping annual fees — $550 and $395, respectively. 

But charge enough on your annual-fee card and your earned rewards will cancel out this recurring charge. 

For instance, the Venture X Card earns unlimited 2x points on most eligible purchases and up to 10x points on eligible Capital One Travel purchases. Plus, it has a $300 annual travel credit that offsets eligible travel purchases, reducing the net annual fee to $95 when fully exploited. If you earn $300 in travel credits and charge at least $4,750 in eligible purchases each year, you’ll come out ahead.

Of course, the total spending threshold you need to clear increases with each new annual-fee card you obtain. Unless your annual-fee cards have valuable perks and benefits that justify their fees, think twice about applying for them simply because their rewards or benefits look good on paper.

3. Interest Rates

It’s best to avoid carrying credit card balances from month to month. You must always ensure that your credit card use remains in line with your ability to repay your charges. If this means keeping your total number of credit cards low and using the cards you have for distinct purposes, so be it. 

With all that said, the interest rate is an important consideration if you plan to (or find yourself forced to) carry a balance. Look for credit cards that offer low or 0% APR introductory promotions on balance transfers, purchases, or both.

Balance transfer promotions are designed for applicants carrying high-interest balances on existing credit card accounts. Purchase promotions make major planned purchases more affordable by allowing new cardholders to finance them over many months without paying interest.

If you’re eager to pay down high-interest debt or finance a big purchase in this fashion, you’ll almost certainly need to apply for a new credit card, because low or 0% APR promotions typically apply to new accounts only. Consider cash-back or travel cards that you can see yourself keeping around after the promotional period ends, or choose a no-fee card that won’t cost anything to keep dormant in your wallet or filing cabinet.

4. Sign-up Perks

Other than 0% APR promotions, the most common type of credit card perk for new cardholders is the early spend bonus — also known as the sign-up bonus or welcome offer, depending on the issuer.

In exchange for exceeding a set spending threshold within a designated time frame, you get a hefty bonus in cash or rewards points. The best sign-up bonuses require thousands of dollars in spending but pay out hundreds of dollars — a great tradeoff if you can fit the spending into your budget.

It’s tempting to get a credit card just to capture the sign-up bonus, but beware of the downsides:

  • The bonus isn’t guaranteed unless you clear the required spending threshold within the allotted time period.
  • You may forfeit your bonus if you close your account too quickly. 
  • Cards with generous early spend bonuses often charge annual fees. 
  • Getting too many credit cards too quickly could damage your credit.

Before applying for a credit card with a nice sign-up bonus, make sure you’re going to use it in the longer term. Or, failing that, that you won’t pay anything to keep it around.

5. Card Benefits and Rewards

A credit card’s rewards program shouldn’t be the only factor in your application decision. Some credit cards have standard-issue consumer protection and fringe benefit packages backed by networks like Visa or Mastercard. Others have attractive perks and privileges worth hundreds or even thousands of dollars annually when fully exploited.

Some common consumer protections and fringe benefits include:

  • Zero liability protection (no liability for unauthorized charges)
  • Complimentary loss and damage coverage for rental cars paid in full with the card
  • Basic travel insurance protections on travel paid in full with the card
  • Roadside and emergency assistance (third-party fees may apply)
  • Return protection (refunding the price paid on attempted returns refused by the original merchant)

These benefits might not be enough to convince you to apply for a card that you wouldn’t have otherwise. But they’re nice to have and could make the difference if you’re deciding between two otherwise similar cards.

More luxurious credit card perks include:

  • Hotel loyalty privileges, such as flexible check-in and welcome gifts
  • Automatic, complimentary customer loyalty status with participating hospitality families or airlines
  • Complimentary or discounted airport lounge access
  • Annual loyalty bonuses paid out on the card member anniversary or when a set annual spending threshold is cleared
  • Airline perks, such as priority boarding and complimentary checked baggage

Ultimately, it’s up to you to determine which of these perks and benefits matter most to you and how high an annual fee you’re willing to bear in exchange. 

If you decide to apply for more than one card with valuable perks, make sure each card has a distinct purpose. For instance, you might choose one card for travel purchases and another for everyday spending. As always, make sure you’re able to extract enough value to offset any annual fees.

6. Your Ability to Manage Payments

Before applying for another credit card, consider your ability to manage your balances and payments. 

You don’t want to miss a payment due date or forget about that lingering balance on a card you don’t use often. With too many credit cards and due dates spread throughout the month, these are real risks.

For simplicity’s sake, it’s best to find an issuer you’re comfortable with and keep most or all of your credit card accounts there. That way, you can see all your credit cards and their balances in a single online dashboard. Make exceptions only in specific cases, such as opening a retail credit card account to capture a limited-time promotion or discount.

7. How Responsible You Are With Your Cards

Finally, consider your overall level of financial responsibility when it comes to credit cards. This requires some soul-searching, which isn’t always comfortable, but it’s important to be honest with yourself so that you don’t take on more than you can handle.

If you’re worried about your ability to control your credit card spending, consider applying for a secured credit card to start. Secured credit cards have low spending limits and require you to deposit cash before making your first purchase, limiting how much debt you can rack up.

Final Word

These factors and scenarios represent only some of the considerations to take into account when determining how many credit cards you should have. The decision to accumulate and discard credit cards is a personal one that ultimately depends on your unique situation.

That situation is subject to change, of course. As your income rises and your credit improves, you’ll have an easier time qualifying for premium credit cards with juicy rewards programs. 

For example, should you decide to parlay your freelancing work into a full-time solopreneur gig, you’ll have a use for a small-business credit card. Or if you decide your growing family deserves a more spacious or luxurious living space, you’ll be grateful for the variety of low or 0% APR introductory promotions out there.

Your spending needs could change faster than you think. Make sure your credit card lineup keeps pace.

Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he's not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.