Should you have more than one credit card? If you have spent ever into a big pile of credit card debt, the answer can be no! But for everybody else, the answer likely does not come as simply, as there may be benefits to having more than one credit card. As per the American Bankers Association, there were 377 million open credit card accounts in the United States in 2020, and other reports found almost 2 in 3 Americans own a minimum of one credit card. There are pros and cons to owning multiple credit cards, but many people may agree that getting multiple credit cards can either help or hinder credit score, depending on how well you manage them.
Ideally, how many credit cards should I have?
There are no ideal numbers of credit cards that you need to have. Your spending habits and capability to pay all bills on time determine your sweet spot. If you like racking up rewards points, you can need to explore cards that maximize grocery, travel, or gas spending. If you need to keep things easy and have a couple of cards that take care of your necessities, that is fine too. What matters you more is the credit habits that you are following for your credit score, irrespective of cards that you carry. On average, Americans possess 3 credit cards and 2.4 retail cards, as per Experian.
Your number of cards doesn’t affect the score much
When the credit bureaus will calculate the credit score, the multiple credit cards are a small part of the equation. 10 percent of your FICO score is related to the kind of credit you utilize, and part of that’s weighted by how several cards you have. You can possess 1, 2, or 22, but what will be more necessary to the credit score is whether you will pay bills on time and how to credit you will use.
What’s the right number of credit cards?
There can be no unique number of credit cards to have, but there are a few general guidelines to consider when deciding to open another card. If you have poor and fair credit, you can struggle to be approved for credit cards and might have difficulty managing one card. It is in your interest to not opening a new card unless your credit score will get improved. On the other hand, if you have better or best credit, you have good qualification odds and can potentially be in a better position to open a new card. Better or best credit scores signals you have a handle on responsible credit behaviors and contain managed accounts appropriately, putting you in an additional favorable position to take on another account.
How Many Credit Cards Is Too Many?
People with high credit scores have an average of 10 credit cards as per FICO. That number is an average, which means it is possible to have more than 10 credit cards and yet have the highest credit score. Having high balances on credit cards relative to credit limit may hurt your credit score, irrespective of the many credit cards you have. Keeping your credit cards open for a long and paying all your bills on time are 2 other factors that aid achieve the best credit score.
It isn’t necessarily how many credit cards you have but how you manage them that is most necessary. The key to having multiple credit cards is keeping your credit use low, pay your balance in full every month, and not charge more than you may afford to pay. You have to be disciplined enough to identify when you are spending is getting out of control and practice restraint so you do not make more debt than you may afford to pay off.
The Risks of Having Too Many Credit Cards
The more credit cards you have, the further diligent you have to be about keeping up with balances and due dates, particularly if you have balances on multiple credit cards. Using a calendar and reminders can be helpful for making sure that you keep up with due dates. Having too several credit cards can hurt if you are attempting to get approved for a mortgage loan. Various lenders consider the amount of credit available to you additionally to the amount of debt you are carrying. Having the capability to rack up higher credit card debt can keep you from getting a mortgage. If you have demonstrated you may responsibly handle credit, credit card issuers are willing to give you credit cards with high credit limits.
Having many credits available to you may be tempting. If you tend to carry a balance on your credit card, it is good to limit the many credit cards you have. That way you do not raise debt costs by paying interest on multiple credit card balances. No matter how several credit cards you have, it is great to carry no more than 2 or 3 with you at a time. You will have a backup credit card in case the initial credit card is declined but you minimize losses in case your purse or wallet is lost and stolen.
Still have questions about credit cards or want to learn what’s lingering on your credit report?