Having a credit card can be beneficial in a variety of ways; from improving your credit score to building financial stability.
However, too many credit cards can lead to overspending and a huge debt burden. So how many credit cards should you have?
There is no specific number although experts recommend having two or three credit cards.
In this guide, we’ll explore the different factors that go into determining the right number of credit cards for you.
We’ll also look at the pros and cons of having multiple cards so that you can make an informed decision about your finances.
The Benefits of Having Multiple Credit Cards
There are a few key benefits to having multiple credit cards, even if you don’t plan on using them all that often.
For one, it can help improve your credit score. This is because each credit card account you have is factored into your credit score calculation, and having more accounts can show lenders that you’re a responsible borrower.
Additionally, carrying multiple cards can come in handy in an emergency. If you have one card that gets lost or stolen, you’ll still have others to fall back on.
And if you have a high limit on one of your cards, you may not need to use another card with a lower limit in case of an unexpected expense.
Finally, having multiple credit cards gives you the opportunity to take advantage of rewards programs. If you have one card that offers cash back or points for every purchase, you can rack up rewards quickly.
If you have multiple cards with different rewards programs, you can choose the card that will give you the most points or cash back for each purchase.
The Risks of Having Multiple Credit Cards
The average American household had approximately $5,525 in credit card debt in 2021, and it’s the second largest type of debt after mortgages. If you have multiple credit cards, that debt and those interest rates can add up quickly.
Carrying a balance on your credit cards can also negatively impact your credit score. Your credit utilization ratio, which is the amount of available credit you’re using, makes up 30% of your FICO score.
If you have multiple credit cards with high balances, it can drag down your score.
Plus, if you miss a payment or are late on a payment, that can also damage your credit score. And, if you have multiple missed or late payments across multiple cards, it can further harm your score.
In short, having multiple credit cards can be risky. If you’re not careful with how you use them, it could lead to debt and damage your credit score.
How to Decide How Many Credit Cards to Have
The number of credit cards you have is up to you and depends on a few factors. Here are a few things to consider when deciding how many credit cards to have:
- Your spending habits: If you tend to spend a lot of money or carry a balance on your credit cards, you may want to have more than one so you can spread out your payments and better manage your debt.
- Your financial goals: If you’re trying to improve your credit score or save money on interest, having multiple credit cards can help you do that. Just be sure to use them responsibly.
- Your credit history: If you have a good credit history, you may be able to qualify for more than one credit card. This can give you more options when it comes to rewards and perks.
How Many Credit Cards Are Too Many?
Having more than two credit cards could become difficult to manage. However, there is not a specific number that works for everyone and the most important thing is to make sure that you can comfortably manage your debt.
Keep an eye on your credit card balances, pay on time to avoid late fees, pay off more towards your balance if you can, and check your credit reports regularly so you know when there is any negative information added.
Conclusion
Ultimately, the answer to how many credit cards you should have depends on your individual financial situation and goals.
The key is to understand what each card offers and make sure that you use them in a responsible manner so that you can get the most out of them without getting into any trouble with debt.
With careful planning and consideration, having multiple credit cards can be beneficial for managing your finances while helping to build up your credit score.
FAQs
How many credit cards should I have for good credit?
While there’s no magic number of credit cards that will guarantee good credit, experts generally recommend having at least two or three active credit cards.
The reason for this is that having multiple credit cards can help improve your credit score in a few different ways.
First, having multiple active accounts shows lenders that you’re capable of managing multiple lines of credit responsibly.
Additionally, using a variety of different types of credit (e.g., revolving vs. installment) can also help boost your score.
How many credit cards should the average person have?
There is no specific number. However, carrying a balance on multiple credit cards can actually hurt your score, so be sure to use your cards wisely and pay off your balances in full each month.
If you’re not sure how many credit cards are right for you, consider speaking with a financial advisor who can help you make a plan that fits your needs.
Is 3 credit cards too many?
No. There’s no magic number when it comes to credit cards. It depends on your spending habits and how you manage your credit card debt.
Is 10 credit cards too many to have?
No, because there is no universal number when it comes to how many credit card accounts you should have.
Sources
- Equifaxaccessed on December 21, 2022
- Annuity.orgaccessed on December 21, 2022
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