How many credit cards should I have?

In a nutshell

Deciding how many credit cards to apply for depends on your particular financial situation, spending habits and goals.

• Multiple credit cards can lead to a more lucrative rewards strategy, combining earnings from multiple categories for higher returns.
• Each credit card will have its own details and payments to keep track of, so you have to be organized and responsible to stay on top of bills.
• While multiple lines of credit with on-time payments can boost your credit score, having too many applications in a short time is a red flag to lenders.

The optimal number of credit cards to have

Unfortunately, there is no cut-and-dry answer to the question of how many credit cards one person should have. It would be nice if there were a perfect formula for maximizing rewards, credit score benefits and payments that don’t break the bank. But, the truth is that the right number of credit cards depends on the person.

According to Experian, the average U.S. consumer had 3.84 credit cards as of the third quarter of 2020, the latest year data is available. But the right number for you will depend on several factors, including how likely you are to manage multiple payment due dates, your goal for earning rewards and more.

For instance, many travel enthusiasts carry several credit cards to earn bonus points in as many categories as possible and maximize the number of free trips they can take with rewards. They might have one that earns a high amount of rewards on dining, plus one for hotel stays, one for lounge access and one for general purchases.

Meanwhile, a cardholder with a poor credit score might have trouble qualifying for multiple credit cards and want to focus on making on-time payments on a single secured or credit-building card.

Learn more:

• How to check your credit score

• How to fix your credit score in 10 easy steps

For most people, the right number of credit cards is somewhere in the middle. Having more than one card can ensure you take advantage of various benefits and rewards rates, and it will increase your available credit and payment history. But avoiding having too many will take some of the additional legwork of managing a multi-card strategy off the table.

Benefits of having multiple credit cards

Many credit card enthusiasts carry multiple credit cards because the benefits of doing so include more rewards and a better credit score. Here’s what you need to know about the perks of having multiple cards.

You can earn better rewards

Rewards credit cards come in all shapes and sizes, offering favorable rates on everything from gas to entertainment. By carrying multiple cards in your wallet, you can combine rewards rates to get a more lucrative return. For instance, you could choose one credit card with a higher earning rate on groceries to bring in points or cash back on those purchases but use another to earn when you spend on travel. A good flat-rate credit card can round out your rewards strategy by boosting your earnings on general purchases.

You’ll access more benefits

Credit cards offer all kinds of perks, whether that’s travel insurance or statement credits for certain purchases. Multiple credit cards can help you access benefits from lounge access to statement credits for food delivery, streaming services and more.

Your available credit will be higher

The amount of credit you have available is one of the most important factors used to calculate your credit score. The more credit you have available — and the less of it you use — the higher your score. By signing up for multiple credit cards, you increase the amount of credit available to you, and as long as you don’t increase your spending significantly to match, you can reduce your credit utilization ratio in conjunction.

Multiple positive payments boost your credit score

Payment history is also a key factor in calculating credit scores, making up the largest percentage of the calculation for FICO scores. Lenders want to see that you can pay your bills on time. Having multiple cards leads to more on-time payments being added to your credit report.

Issues with having multiple credit card

While having multiple credit cards has many potential benefits, there are also some drawbacks to consider. For one, it just takes more time and energy to keep track of multiple cards, and not everyone wants to put that much effort into their card strategy. These are other issues to look out for.

You could pay several annual fees

While there are plenty of great credit cards without annual fees on the market, many of the best credit cards charge fees ranging from $95 to nearly $700. If you sign up for several credit cards with an annual fee, you could quickly end up shelling out hundreds of dollars a year for this purpose. Plus, with multiple cards to keep track of, it can be difficult to make sure you are getting enough value out of each card's rewards and benefits to justify the cost.

You’ll have multiple payments to juggle

Every credit card will have its own payment due date, and you could end up having to sign in to multiple apps or websites to pay your bills each month. If you aren’t careful, juggling multiple payments could lead to paying late or even missing a payment, which negatively impacts your credit score and costs money in interest.

Too much spending leads to high credit utilization

Having multiple credit cards can positively impact your credit utilization with responsible spending, but the inverse is also true. If you have several cards, you could be tempted to put more charges on credit, which could end up increasing your credit utilization ratio and negatively affecting your score.

You could earn rewards in multiple rewards ecosystems

While multiple cards can help boost rewards earnings, it’s important to remember that all credit card rewards are not the same. Some cards earn cash back, while others earn points or miles with a particular airline or hotel loyalty program or credit card program. You can typically only redeem points and miles for purchases with that loyalty program or select transfer partners, so managing rewards in multiple ecosystems gets complicated. If you’re willing to put in some additional research time to find ways to combine points you may find yourself better off, but it is quite a bit of effort to make use of the currency systems of several reward plans.

Too many applications are a red flag to lenders

When you apply for several credit cards in a short period of time, it could signal to lenders that you are desperate for credit — and therefore a high risk borrower. Plus, every card application is accompanied by a hard check on your credit score, which can reduce it by a few points.

Tips for managing multiple credit cards

If you decide a multi-card strategy is right for you, follow these tips to get the most out of the approach:

• Schedule reminders for payment due dates: To avoid missed payments, schedule calendar reminders for your card payment due dates. You also might be able to contact your credit card issuer and ask to change your due date, so you can sync schedules.
• Use the right card at the right retailers: Multiple rewards cards can lead to higher earnings, but only if you use them strategically. Make sure you are swiping the card with the highest earning rate in a particular category when you shop with those stores.
• Choose cards with complimentary rewards rates and ecosystems: To earn the most points or cash back, you’ll want to apply for cards that complement each other. Avoid applying for multiple cards that offer a high rate on groceries; instead, combine one that earns on groceries with one that earns on gas. You also might consider applying for cards that earn the same type of points or miles — or opting for flexible cash back — to make redemptions easier.
• Avoid high credit utilization: Remember that having multiple credit cards isn’t an excuse to increase your spending. Aim to keep your total credit utilization under 30% for the best effect on your credit score.

The AP Buyline roundup

Signing up for multiple credit cards can be a good strategy for your credit score and your potential rewards earnings. That said, juggling multiple cards requires more time and energy, and has some potential downsides if you don't manage cards carefully. Consider your personal spending habits, credit score and rewards goals before deciding the right number of cards for you.

Frequently asked questions (FAQs)

How many credit cards can I apply for at once?

There is no official limit to the number of credit cards you can apply for, but every issuer has its own rules for when they will issue new cards. For instance, Chase is known to hold customers to a “5/24” rule, meaning you are not likely to be approved for a new Chase card if you have applied for five or more credit cards in the last 24 months. In general, applying for too many cards at once signals to lenders that you are desperate for credit and reduces your approval odds.

Does canceling a credit card hurt your credit?

Canceling a credit card can hurt your credit score, but the impact depends on several factors. When you cancel a credit card, you reduce the total amount of credit available to you, which is an important factor in your credit score. The average age of accounts is also a key factor in calculating your score, so if you cancel an older credit card, it can have a more significant negative effect than a card you’ve only had open for a short time. That said, closed accounts can remain on your credit report for up to 10 years.

Will two credit cards build faster credit than one?

Yes, having more than one credit card can help you build credit faster; you will have a longer positive payment history, available credit and lower credit utilization. All of these are important factors for improving your score.