How Many Credit Cards Should You Have?

Blog Post08/01/2017
Debt Management

How many credit cards you keep in your wallet is one of those personal decisions that doesn’t always lend itself to a right or wrong answer. Whether you have one card or 10 comes down to personal choice and your own unique habits, but you might want to keep a few considerations in mind.

It’s How You Handle Them

The number of credit cards you hold isn’t nearly as important as what you do with them. Sarah Davies, senior vice president of product management and analytics at VantageScore, says it’s better to have just one or two cards with a spotless payment record than a multitude of cards with high balances and missed payments.

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Keeping Two Credit Cards

The average American has 3.5 credit cards, according to a report by Postconsumers.com, but owning fewer cards might be better for you. Two could be a good number if you plan to use one as a primary and the other as a backup. This way you’ll have one to fall back on in an emergency, such as if the first one is lost, stolen or somehow compromised.

Having Multiple Credit Cards

It’s a safe guess that each of your credit cards will have a different due date each month. This might not be much of an issue if you have only two or three cards, but suppose you go over the national average and have six, seven or eight? Unless you’re extremely regimented when it comes to paying your bills, it can be easy to miss one of those payments. A simple oversight will ding your credit score. It might be easier to keep fewer cards with higher credit limits than lots with low limits — you’ll still have roughly the same amount of credit available and fewer payments to keep track of.

The Pitfalls of Having Just One Card

Being too conservative has a few drawbacks, too. Not only might you find yourself in a short-term cash quandary if you lose the single credit card you have, but if you have to use it heavily in any given month, this can affect your credit utilization — an important component of your credit score.

Your credit utilization is the balance you owe on all your credit cards divided by your total credit limits. For example, if you have one card with a $1,000 limit and you’ve charged $700 on it, your credit utilization would be 70 percent. But if you have two cards each with a $1,000 limit and you’ve charged $700 total on one or both of them, your credit utilization drops to 35 percent. The lower the percentage, the better your credit score.
Of course, one card should do you just fine if you’re particularly disciplined and you pay off your balance every month. If you’re a new credit user, it might be wise to stick to just one card for a little while as you get the lay of the land and understand how to handle it. On the other hand, let’s say you have only one card with a somewhat low credit limit of $500. If you regularly charge $400 a month and can’t always pay off the entire balance at the end of the month, your credit score could take a hit.

Those Tempting Rewards Cards

Rewards cards can be another big reason to keep at least two credit cards. Some offer very nice perks like airline miles. The catch is that these cards often carry higher interest rates. If you use one card for big purchases so you can tally up airline miles toward next year’s vacation, you might not want to also use it for an occasional dinner out or gasoline for your car. Having more than one card — one with rewards and one with a lower interest rate — can allow you to balance your purchases and make the most of your credit without going broke paying exorbitant interest rates on all purchases.

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