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How Many Credit Cards Should I Have?

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There’s no perfect answer to how many credit cards you should have. In general, if you’re looking to build good credit, it’s a good idea to have at least one or two credit cards.

According to a 2019 report from Experian, the average American has four credit cards with an average credit card balance of nearly $6,200. Another recent study from FICO found that consumers with a credit score above 800 had an average of three cards.

Four credit cards

Why Do I Need Multiple Credit Cards?

If you already have one credit card that you diligently pay every month, you may be wondering why you would want or need to apply for more.

While you should never apply for more credit cards than you can handle, there are some strategic benefits to having a few different credit cards.

  • Different networks ensure you’re covered with all merchants. If you have a credit card from each of the major networks — American Express, Discover, Mastercard, and Visa — you’ll have a backup in case a certain merchant only accepts one card type.
  • Multiple cards means a diverse array of rewards programs. Opt for credit cards that have different rewards programs. Look for a card with a cash back program and another with airline points to maximize your reward potential.
  • Greater total credit limit means more buying power. Say you have one credit card with a limit of $3,000. This means you have a total buying power of $3,000 — however, using more than 30 percent of your credit limit ($1,00 in this case) may hurt your credit score. Now say you have three credit cards all with a $3,000 limit. Your total buying power has now increased to $9,000, giving you the freedom to spread out your purchases evenly and spend that same $3,000 without hurting your credit score.
Maxing out a credit card

Now that you’re familiar with the benefits of multiple credit cards, you may be wondering — how many is too many?

Can Having Too Many Credit Cards Hurt My Credit Score?

Your credit score won’t take a hit simply because of the fact that you have multiple credit cards. However, there are a few factors associated with multiple credit cards that may decrease your score, so keep the following things in mind:

  • Don’t apply for too many new credit cards at once. Any time you apply for a new credit card, a hard inquiry is recorded on your credit history. Too many hard inquiries within a short amount of time will lower your score.
  • Don’t open a new credit card if you’re about to buy a house or car. Lenders like to see a stable credit history, so avoid opening any new lines of credit within four months of applying for a mortgage or auto loan.

No matter how many or how few credit cards you ultimately decide to have, responsible credit management is key. Good credit isn’t as much about how many credit cards you have as it is about how well you manage them.

The Importance of Good Credit Management

When you have multiple credit cards, organization and discipline are of the utmost importance. Make sure to keep the following best practices in mind:

  • Pay on time. Set a reminder. Write a sticky note. Set up autopay. Do whatever you need to do to make sure your payment history is solid, as it makes up 35% of your credit score.
  • Keep your credit accounts open. The age of your credit history plays into your credit score. Responsibly paying off credit cards for years may increase your score, while having only new accounts will likely hurt it.
  • Only use 30 percent of your credit limit. No matter how many credit cards you have, strive to use only 30 percent of each one at any given time. The average consumer with a credit score of 800 or higher uses just 4 percent of their limit, according to FICO.
Average consumer credit score

Remember that only you can decide how many credit cards you feel comfortable taking on. You certainly don’t want to have so many credit cards that you can’t keep track of payments. If you’re ever unsure of your bandwidth, consult a financial advisor.

By keeping your utilization low and your credit score high, you’ll have a greater likelihood of proving trustworthiness to lenders and opening up more financial possibilities for your future.

Sources: CNBC | Experian | FICO

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