How Many Credit Cards Are Too Many?
There is no magic number for determining how many credit cards you should have at one time. The answer not only differs from person to person, but for you it will change depending on your evolving finances, expenses and knowledge. However, there is a sweet spot that most cardholders aspire to, and for good reason. Here’s how you can figure out the right number of credit cards for you.
Why it’s good to have multiple credit cards
First, as long as you stay out of debt, having multiple credit cards is a good thing. Credit scoring formulas do not penalize you for having too many credit accounts—quite the contrary. Since each new credit card increases your overall credit limit, it’s beneficial for you to have more open cards (especially if you keep your credit usage below 10%). In addition to improving your credit score , multiple cards naturally allow you to earn more rewards .
Then how many credit cards are too few?
The exact number of cards you must open depends on your specific financial situation. That being said, we want to be a little more helpful than saying, “ Well, it depends! So, how many cards should the average responsible cardholder have in their rotation? A recent Experian report shows that the average American holds about four credit cards. And in 2018, FICO found that people with high credit scores (800+) tend to have three open cards on average. In addition, credit bureaus suggest that five or more accounts (which can be a combination of cards and loans) is a reasonable target.
So maybe you have too many credit cards?
Certainly. The answer to the question “how many credit cards are too many” depends on whether you can always pay off the entire balance on each card each month. More cards can be problematic to maintain, and you may find that more cards make you spend more . Whether you have one card or five, don’t buy anything with a credit card that you wouldn’t normally buy with cash. Any boost to your credit score or cash back isn’t worth going into credit card debt.
And while your credit score won’t get worse because of “too many cards,” be careful when trying to cheat the system. If you try to open and close a bunch of cards at the same time (called card shuffling ), this can result in a credit request that can lower your score by about five points over a period of about six months.
bottom line
If you only have one credit card right now and you pay off your balance in full each month, it’s time to consider adding another one, two or three. And if you’re already balancing multiple cards, look for signs that you should replace one of your old credit cards . You can find the best credit card for you with lists of the best on sites like Credit Cards. Explanation is here .