How Many Credit Cards Should I Have? Top 9 Facts

Credit Cards Top 9 Facts

Do you need more than one credit card? If you’ve ever racked up a mountain of credit card debt, you undoubtedly know the answer: No!

Taking out many credit cards might surely make your debt repayments unsustainable. However, there is no clear answer to how many credit cards you should have, and having more than one credit card may even be advantageous. Most financial experts agree that having numerous credit cards may help or hurt your credit score depending on how effectively you handle them.

This hasn’t prevented Americans from taking advantage of the credit cards that have been made available to them. According to an Experian survey from the third quarter (Q3) of 2020, the typical American currently has 3.84 credit cards. This statistic is down 4% from 2019, and it follows a trend of credit card debt reduction among US customers as the coronavirus outbreak caused financial concern.

1. Is It Good to Have Multiple Credit Cards?

One of your main worries about having several credit cards is the impact on your credit score. That is a typical concern, but having more than one credit card may actually boost your credit score by making it simpler to maintain a low credit utilization ratio.

For example, if you have one credit card with a $2,000 credit limit and spend an average of $1,800 a month on it, your credit utilization ratio (the percentage of your available credit that you utilize) is 90%. When it comes to credit scores, a high credit use percentage can lower your score. It may not seem fair—after all, if you only have one credit card and pay it off in full and on time every month, why should you be punished for utilizing the majority of your credit limit? However, this is how the credit score system works. 

Most credit experts suggest that you avoid using more than 30% of your available credit per card at any one moment in order to boost your credit score.

Spreading your $1,800 in expenditures over many credit cards makes it much simpler to keep your credit usage ratio low. This ratio is only one of the elements that the FICO credit scoring model considers in the “amounts owing” component of your score, but it accounts for 30% of your credit score. Only your payment history is weighted more strongly (at 35% of your credit score). 

Opening accounts you don’t need solely to raise your total accessible credit might backfire and harm your score, according to FICO.

  These rates might have an influence on your disposable income and investment returns.

Important Tips:

  • The typical person in the United States presently has 3.84 credit cards. This statistic is down 4% from 2019, and it follows a trend of credit card debt reduction among US customers as the coronavirus outbreak caused financial concern.
  • By spreading costs, using more than one credit card may help you maintain your credit line use ratio per card lower than the suggested 30 percent.
  • There may be advantages to having many cards, such as combining different kinds of rewards cards to maximize earnings across all areas of expenditure.

2. How Many Credit Cards Should You Have?

Because everyone’s scenario is unique, there is no magic number to answer that question. There is a compelling case to be made for owning at least one credit card in order to take advantage of the inherent convenience, security, and other advantages. Justifying using more than one credit card might rely on whether you need the additional credit lines to suit your monthly discretionary budget or if you want to leverage your daily spending to earn other sorts of rewards such as cashback, points, or airline miles.

3. How Many Credit Cards Is Too Many?

While having a new credit card might occasionally help your credit score by decreasing your overall credit line use ratio, getting a lot of cards in a short period of time is not recommended. Many card issuers have even put policies in place to counteract this occurrence, which has evolved as a result of users attempting to rig the system by signing up for many credit cards to get bonuses and then canceling after completing the spending criteria. For example, Chase has a policy known as 5/24 that prohibits you from being authorized if you have applied for more than five credit cards (regardless of the issuer) in the previous 24 months.

Another disadvantage of having a big number of credit cards is that it may make you seem riskier to lenders and reduce your credit score. Even if you have paid them all off, the simple fact that you have a lot of open and accessible credit lines might make you seem to the next lender as a possible problem. While there is no exact amount that is deemed too many, it is better to apply for and carry only the cards that you need and can justify using based on your credit score, capacity to pay bills, and rewards objectives.

4. Different Credit Cards, Different Benefits

Having a variety of credit cards allows you to earn the most possible rewards on every credit card transaction.

For example, you may use a Discover it Cash Back card to take advantage of its rotating 5% cash-back categories, which allow you to get 5% back on purchases such as grocery, hotels, restaurants, and petrol (up to $1,500 in total expenditure every quarter). You may have another card that always offers you 2% back on petrol—use this card during the nine months of the year when Discover doesn’t pay 5% cashback on gas.

Finally, you could have a card that gives you a flat 1% back on all transactions. This is your main card for any purchase that does not qualify for a greater reward. For example, you could be able to receive 5% back on all apparel purchases with your Discover card in October, November, and December; the rest of the year, when no special offer is available, you’d use the 1% cash-back card.

Of course, you don’t want to go overboard—having too many accounts makes it easy to miss a monthly payment or lose a card. The troubles that might arise as a consequence of such negligence can soon deplete whatever funds that you may have amassed.

5. Compromised Cards

A credit card issuer may unexpectedly freeze or cancel your card if they notice possibly fraudulent activity or think that your account information has been hacked.

In the best-case situation, you will be unable to use your card until you contact the credit card provider and confirm that you are, in fact, on vacation in Bermuda and that your card has not been stolen. However, you won’t be able to make that phone call from the cash register since you’ll need to supply sensitive personal information to prove your identification. If you wish to finalize your transaction, you’ll need to find another means to pay.

In the worst-case situation, the corporation will give you a new account number, and you will be without your card for a few days until your replacement card arrives in the mail. Another chance is that you may misplace or have a card stolen. To prepare, you should have at least three cards: two to bring with you and one to keep in a secure location at home. As a result, you should always have at least one card available for usage.

It’s a good idea to carry at least two or three credit cards because of possibilities like these. If you just wish to carry one credit card, make sure you always have a backup payment option, such as cash or a debit card, on hand. These cards provide convenience and security, but are they worth the cost? Examine the costs, if any, and be particularly cautious with prepaid debit cards.

6. Should You Have a Credit Card for Emergencies?

It would be preferable if you didn’t have to use a credit card in an emergency—rather, if you had enough money in a liquid account, such as a savings account, to utilize in such a case. However, if you are away from home on vacation and don’t have cash on hand to pay a vehicle repair or other unforeseen expenditure, a credit card may undoubtedly come in handy. Other circumstances, such as an unexpected medical cost or job loss, might quickly deplete any emergency savings. In times of trouble, having at least two or three credit cards may come in handy. These cards should ideally have no annual fee, a large credit limit, and a low-interest rate. However, if you resort to credit cards after losing your job, use extra care to avoid incurring unsustainable credit card debt.

7. How Much Credit Should I Utilize Across All My Credit Cards?

Experts typically advocate keeping your credit usage rate below 30%, with some recommending that you strive for a single-digit utilization rate (around 10%) to have the greatest credit score.

8. How Many Credit Cards Does the Average American Have?

According to an Experian survey from the third quarter (Q3) of 2020, the typical American currently has 3.84 credit cards. This statistic is down 4% from 2019, and it follows a trend of credit card debt reduction among US customers as the coronavirus outbreak caused financial concern.

9. How Many Times Should You Apply for a Credit Card?

In principle, you are free to apply for new credit cards as often as you wish. Because the typical online application only takes a few minutes, you may apply for a large number of cards in a short period of time.

However, this does not imply that you should apply for many credit cards at the same time. Waiting between credit card applications is generally healthier for your credit score—and it may even boost your chances of acceptance.

10. Does Having More Credit Cards Help Your Credit Score?

Having numerous credit cards might enhance your credit score, but it can also hinder it. It all comes down to how effectively you handle the cards you have.

The same criteria apply regardless of how many credit cards you have: Maintain a low balance and always pay your payments on time. While the amount of credit cards you hold is unlikely to affect your credit score in and of itself, you should avoid applying for many new credit cards at the same time. More cards, and therefore a bigger credit limit, may help you improve your credit scores over time provided they are handled correctly.

11. Can You Have Two of the Same Credit Card?

As long as you match the qualifying requirements, many credit card companies will accept you for another one of their credit cards. Furthermore, if you’ve always handled your present credit card correctly, you may find it simpler to obtain acceptance for the new credit card.

However, don’t expect to get authorized for the same conditions as your present credit card. Your application will be approved by the credit card company based on your current income and credit score, which may have changed since you applied for the first card.

The Verdict

There are several advantages to having multiple credit cards, but only if they are used carefully. To guarantee that having many credit card accounts works for you rather than against you, be aware of the perks offered by each card, your credit limit on each account, and, most importantly, your payment due dates.

Use each card to its maximum potential, keep your balances low, and always pay your balances in full on or before the due dates.


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Toshiko Osaka