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How Many Credit Cards Should You Have?

Last updated Nov 1, 2023

According to a report from Experian, the average American has between three and four credit cards. This represents a drop from the pre-pandemic years, but nevertheless, usage remains high, particularly among those age 40 and older.1

We live in an uncertain economy where recessions, unemployment, and other issues are always a cause for concern, and even if your financial situation is solid you may worry about bringing down your credit score or going into debt. But there are good reasons for having multiple cards, even if you don’t regularly use all of them. In fact, if you’re careful about your spending and diligent in your repayment behaviors, carrying an array of credit cards can help you build a better, more robust financial life.

Reasons for carrying more than one card include:

  • Building good credit. To build good credit, you need to prove that you can handle it responsibly. Having multiple open credit lines - assuming you maintain a good credit utilization ratio on each of them and make your payments on time - is one way you can achieve this. 
  • Preparing for the unexpected. In a perfect world, all of us would have a well-stocked emergency fund to pay for surprise expenses like car repairs, vet bills, and healthcare costs. But the reality is that a staggering 70% of Americans live paycheck-to-paycheck,2 and building such a fund may not always be possible. If you’re struggling to save, consider keeping a “for emergencies only” credit card for urgent expenses you’d rather pay off over time.
  • Earning rewards. If you’re an experienced credit consumer and have proven to yourself that you can refrain from overspending, credit cards can help you score benefits and rewards. Ideally, these rewards should tie into your interests and lifestyle.

“So, How Many Cards Should I Have?”

Okay, you may be thinking. So how many credit cards am I supposed to have? It’s a good question - and one without a straightforward answer. 

There’s no one rule for how many credit cards a person should have. Instead, contemplate how many you can reasonably handle by balancing responsible spending habits with your financial goals. For some, that may be as few as two; for others, it could be as high as five or more. You can be strategic about your credit card ownership by starting with two or three cards.

First, think about a card for everyday use, such as purchasing groceries and gasoline. Look for one with a low interest rate and little to no annual fees, and make sure to pay your balance off in full every month.

You might also consider having a card for emergencies. Hopefully you won’t have to use it often – if at all – but may make sense if sudden expenses arise that you can’t afford out-of-pocket. Just make sure you only use it for emergencies, and don’t carry a balance on it otherwise.

If you’re confident about your ability to maintain a third credit line without going into debt, evaluate different rewards cards and find one with useful perks that fit your lifestyle and interests. For example, if you love a specific retailer, look into a store credit card that offers rewards you can use at that retailer; or if you’re a seasoned traveler, choose a card with “points” you can exchange for travel necessities, such as airline miles and hotel stays.

Things to Remember

You already know that consumers have hundreds, if not thousands, of options when they’re in the market for a new credit card. It can be tempting to apply for and use several cards at once, but keep these guidelines in mind.

Space Out Your Applications

An application for new credit usually leads to a “hard inquiry” on your credit report, which can reduce your score by up to five points. Although the impact to your credit score is short-lived, the inquiry itself remains on your report for up to two years

Since lenders use your credit score and report to make an assumption about your credit habits and likelihood of paying your bills on time, avoid submitting multiple applications within a short timeframe. In doing so, you can preserve your score and avoid having several inquiries appear on your report at once.

Be Vigilant About Use and Repayments

Having multiple cards will only help your finances if you’re careful about how you use them. Make sure you keep your balances in check, only charge what you can reasonably afford to repay, and make all your payments on time. 

Additionally, remember that each card you carry a balance on equals a monthly payment you must make. Simplify the repayment process by setting up alerts to remind you of upcoming due dates and/or scheduling automatic transfers that pull payments from your checking account each month. And if you find yourself overwhelmed by juggling multiple payments, consider rolling them into a single monthly payment with a debt consolidation loan from Upgrade!

Keep Credit Cards Open - Even If You’re Not Using Them

There may come a time where you pay off a card and don’t plan to use it anymore. At that point, it can be tempting to close the account; but contrary to popular opinion, there’s a very good reason to keep a card open (as long as it doesn’t have an annual fee.) An open credit card without a balance improves your credit utilization ratio, which is the second-biggest factor in your overall credit score. This is a safe and relatively easy way to boost your overall score.

If you can avoid the risks and pitfalls of credit, owning more than one credit card can help you secure a better financial future. Use our guide to choose the right card(s) for you and your lifestyle!