Key points:
-
The right number of credit cards to have depends on the person’s spending habits and financial needs.
-
Benefits of having multiple credit cards include having a backup card or taking advantage of multiple rewards programs.
-
Applying for multiple credit cards at once will typically result in hard inquiries on your credit report and could impact your credit score.
With so many credit card options, you may ask yourself, “How many credit cards should I have?” You may find it convenient to have multiple accounts to use to help maximize your rewards and increase your overall available credit.
Still, there are risks to having multiple credit cards. That’s why it’s important to understand the pros and cons of managing multiple credit cards, as well as strategies for handling credit card debt and making the most of your credit card rewards.
Reasons to have multiple credit cards
Using multiple credit cards can offer many benefits to cardmembers.
Backup if a credit card has a security issue
If one of your cards is lost or stolen, you’ll have a backup one to use until you get a replacement card. Having multiple credit cards could help ensure you always have a credit card to use for certain purchases or during an emergency. Just remember that it may be helpful to carry or store at least one card separately from your other cards to avoid them all being stolen or misplaced at once.
If you have a card with a low credit limit, getting one or more additional cards can increase your total credit, giving you the ability to make more purchases. Having higher overall credit available may also help lower your credit utilization ratio, which can contribute to an improved credit score. Your credit utilization rate is the percentage of your available credit that you spend. As a rule of thumb, it’s best to keep your credit utilization ratio as low as possible.
Enjoying multiple credit card rewards programs
Having more than one credit card can help you access various types of rewards programs or cash back rewards. If your current rewards card offers cash back or another type of reward for travel, you may want a new credit card that offers perks for different purchases, like a gas credit card that offers more cash back on gas or a card that offers bonus cash back when you spend on groceries at the supermarket. Consider which type of rewards program might work best for your spending needs before deciding which new card to apply for.
Did you know?
Discover offers a wide selection of rewards credit cards and every Discover® Card lets you earn rewards on every purchase. Choose the card that earns the type of rewards that are most valuable for you.
Disadvantages of having multiple credit cards
According to Experian®, the average person in the U.S. has about 3.9 credit cards each. Even so, having fewer cards may be better for some people because using multiple credit cards may have certain disadvantages.
Harder to manage spending
With multiple cards in play, you may find it challenging to keep track of your total spending and your credit usage. You may even be tempted to overspend, especially if you have a large amount of credit available. Even with a higher credit limit, overspending could hurt your credit utilization ratio.
It's also important to note the interest rate on each new credit card. If you carry multiple balances, each one's interest rate may cause your credit card debt to grow rapidly.
Each card may come with its own payment date, potentially making it more difficult to submit payments on time. Overdue payments can appear on your credit report and hurt your credit score. A low credit score can impact your ability to open a new credit or loan account.
Multiple cards may mean multiple annual fees
You may sign up for cards during an introductory period to take advantage of an annual fee waiver. Once that introductory period ends, however, you may be left with multiple cards that carry annual fees.
If you want to use two or more credit cards, you might consider options without annual fees. Discover, for example, has no annual fee on any card. So, you can have more money to spend where it matters.
Should you apply for multiple credit cards at once?
Each credit card application results in a hard credit inquiry, which may lower your credit score. Applying for different cards at the same time also makes you look risky to lenders, so it’s best not to do this if you’re planning to apply for another credit account, such as a home loan or personal loan, in the near future. You should also check to see if the card issuer limits the number of credit card accounts an individual can open.
Best ways to manage multiple credit cards
It’s important to know how to use multiple credit cards effectively and manage them responsibly to best meet your financial goals and build a strong credit history.
Use all of your cards regularly
Some credit card issuers will close your credit card account if you don’t use a card for a certain period of time. This will lower your total available credit, which may hurt your credit score. So, remember to use all of your cards regularly and keep them active.
Keep track of multiple cards and make payments on time by setting up payment notifications instead of relying on a paper credit card bill. Most credit card issuers will allow you to enable payment alerts or set up automatic payments so that you don’t miss due dates.
Depending on your credit card issuer, you may be able to change the date your bill is due each month. This can help you schedule all of your payments for the same day to help you remember and budget properly.
You can also set the due date to align with when you get paid from work. This may help you ensure you always have money to cover your bills when needed so you don't harm your payment history and credit score.
Avoid canceling multiple cards at once
Canceling many cards at the same time may impact your credit score, especially if you carry a balance on your remaining cards. That’s because closing an account will lower your total available credit, which can raise your credit utilization rate.
Canceling cards may also impact your length of credit history, another factor in determining credit scores. If you need to close a credit account, it may be best to close one that is new compared to closing older accounts.
Check which spending categories earn a higher rate of rewards for each card. Then make sure to put each purchase on the rewards card that offers the best and most relevant rewards. If one card offers rewards for travel purchases, for example, make sure to use it when booking your plane tickets and hotel reservations.
How many credit cards should you have?
No specific number of credit cards is best. It all depends on the individual’s spending habits and financial needs.
When managed properly, multiple cards may yield more advantages than disadvantages. You’ll have to determine how many cards you can manage to ensure you maintain good credit and if a mix of credit cards will benefit your long-term financial goals.
The best credit card mix for each person may differ. For example, maybe you already have a bank credit card, but want to earn cash back on gas. In that case, you might benefit from adding an additional credit card from a credit card company that offers those types of rewards.
If you’re seeking an additional credit card, it's important to make sure you can manage your existing credit responsibly before completing a credit card application for a new card. With this information in your hands, hopefully, you now have the knowledge to make the best decision for your financial future.
