How many credit cards should you have? Many financial advisers often suggest having only one or two credit cards. That advice makes sense, especially for beginners. It helps avoid overspending and missed payments. Still, having more than two credit cards isn’t always a bad thing. It can work in your favor if you manage them well. Let’s discuss why owning multiple cards is not as scary as it sounds—and why it could be a good thing.
What’s Bad About Having Multiple Credit Cards?
1. Difficulty Managing Multiple Accounts
Managing multiple credit cards can quickly become a challenge if you’re not staying on top of things. With different billing cycles and due dates to remember, the chances of missing a payment rise, which can negatively affect your credit score. Since payment history makes up about 35% to 40% of your score, even one missed payment can cause significant damage.
2. Hard Inquiries Impact Your Score
Applying for multiple credit cards in a short span results in hard inquiries on your credit report. These inquiries can decrease your score, which may be problematic if you’re aiming for a large purchase, such as a house or car. To reduce the negative impact, try to space out your credit card applications by at least six months.
3. Increased Risk of Overspending
Owning several credit cards can increase the temptation to spend more than you should. Without careful budgeting, this can quickly spiral into debt. Managing several cards requires discipline and a good grasp of your finances to avoid falling into this trap.
What’s Good About Having Multiple Credit Cards?
1. More Flexibility in Budgeting
Having more than one credit card can actually make money management easier, especially when you’re intentional about how you use each one. You can assign different cards for different purposes. For example, one card could be for everyday expenses like groceries and bills, while another is just for travel or online shopping. This setup makes it easier to track where your money goes and can help you stick to a budget.
2. Building a Well-Rounded Credit Profile
Credit scoring models look for variety. Using a mix of credit types, like cards and installment loans, shows lenders that you can handle different kinds of debt. Having several credit cards and managing them well proves that you can stay organized and make payments on time. This gives you a better chance of getting approved for future loans or larger financial decisions.
3. Helps Keep Your Credit Score Healthy
Your credit score drops if you use too much of your available credit. Even if you pay your card in full every month, using a large part of your limit can still hurt your score. Having more cards gives you more total credit, so your spending takes up a smaller piece. That helps keep your score in good shape.
4. Having a Backup for Emergencies
If your only card gets declined or blocked due to fraud, you might be stuck. Having a second or third card ensures you have a backup when you need it most. Whether you’re traveling, dealing with an emergency, or just facing a tech glitch, an extra card gives you peace of mind.
5. Maximizing Rewards and Benefits
Every card comes with different perks. Some give you cash back on groceries, others offer travel rewards or dining points. If you match the right card to the right purchase, you can earn more from your usual spending. Just make sure you’re not chasing rewards at the cost of paying interest or fees.
6. Smart Borrowing Without Paying Interest
Some credit cards give you a break from interest for a few months, either on new purchases or when you transfer a balance from another card. This can come in handy if you need to cover a big expense or want to pay off debt faster. As long as you stay on top of your payments and stick to a budget, you can use these offers to save money and reach your financial goals without extra charges piling up
How Many Should You Have?
There’s no one-size-fits-all answer, but a few key factors can help guide your decision:
1. Your Spending and Payment Habits
If you pay your bills on time and track your spending, you might handle more than two cards. However, if you struggle with payments or budgeting, it’s better to start small and build good habits first.
2. Total Number of Credit Accounts
Credit scoring models consider your entire credit profile. It’s not just about the number of credit cards you have. Experts recommend at least five total accounts (including loans and credit cards) to build a strong credit profile.
3. Your Age and Credit History
If you’re new to credit, start with one or two cards. Avoid applying for multiple cards quickly, as it could lower your score. Space out applications by at least six months to minimize the impact of hard inquiries.
4. Credit Age and Account Management
Your credit age—how long you’ve had credit—affects your score. The longer your credit history, the better it is for your score. If you’re considering closing a card due to fees, see if you can switch to a no-fee version instead.
5. Upcoming Big Purchases
If you’re eyeing a big purchase, like a house or car, it’s wise to wait before applying for new credit cards. A slight drop in your score could impact your loan approval or interest rates.
It’s Also Good to Have Multiple Credit Cards, But…
I don’t think having several credit cards is a bad idea—if you manage them well. The issue isn’t the number of cards, but how you handle them. Some people thrive with five or more cards, while others struggle with just one.
What matters most is self-awareness. Are you opening new cards just because of a promotion or because you want to “build credit”? Or are you choosing them based on your financial goals and spending habits? If you’re in control, multiple cards can help your credit score, not hurt it.