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It’s a question you may have asked yourself at some point: How many credit cards should I have? Or if your wallet is jammed with a few rows of plastic, you may wonder if you have too many cards.
The truth is, there isn’t one right answer to how many credit cards you should have – the number will largely depend on your individual financial needs and spending habits. You could benefit from having multiple credit cards, but if you’re not using them responsibly, you could also end up in a financial jam.
No matter how many credit cards you have, read on to learn about the benefits and risks of multiple credit cards, and tips for using your credit cards responsibly no matter what amount could make sense for you.
According to ValuePenguin, in 2019 the average American cardholder had approximately 2.35 credit cards, which can give you an idea of where you stand. Now, that number is just what’s typical of cardholders in the US, so the number of credit cards that you hold (or may want to hold) could be higher or lower. That number also differs based on things like income, age, and even location.
It probably won’t surprise you, but on average, folks 21 and under have the fewest credit cards at just over 1, while those ages 51 to 70 tend to have the most, coming in at nearly three credit cards each. Credit card ownership varies by state, too: New Jersey residents take the lead with an average of 2.54 credit cards, while people living in Mississippi average the least number of credit cards, around 1.69 per person.
You may have heard that having a lot of credit cards can be a bad thing, but if you’re a responsible cardholder, having more than one kind of plastic might be valuable. And could possibly help you build a good credit score, as long as you’re paying your bills on time and in full.
There are dozens of different rewards credit cards out there: ones that’ll reward you with miles, points, or straight cash back when you use them. Essentially, you’re getting compensated for purchases applied to a credit card. You typically need to have good-to-excellent credit to qualify for such cards.
If your first (and only) credit card isn’t rewarding you as much as another would, it could make sense to apply for another one that’ll potentially earn you more rewards.
And even if you already have a rewards credit card, it could be worth looking into adding another one to make sure you’re taking full advantage of your earnings. For instance, maybe you have a flat rate rewards card that gets you two points per dollar on every purchase. But if you’re an avid foodie who frequently spends money on groceries and dining out, you could look into adding a credit card that rewards you extra for those purchases. That way you can use the new rewards card for those expenses, while keeping your flat rate rewards card for everything else.
You might be interested in adding another credit card to your wallet in order to score a signup bonus. Signup bonuses are an added incentive in which new cardholders can earn a bonus of redeemable points, miles, or cash back once they meet a minimum spend within a certain window (usually 3 months from account opening). Signup bonuses can be worth a couple hundred dollars, which new cardholders can get just for spending money they had planned to shell out.
Multiple credit cards could contribute to a good credit score, via your credit utilization ratio, which is essentially how much of your available credit you’re using at any given time. Multiple credit cards can mean you have more available credit than with just one credit card.
Having more credit, but keeping your expenditure the same can lead to a lower credit utilization ratio, which is a major factor in your credit score (it’s typically recommended to have a credit utilization ratio of 30% or lower). So if you have $20,000 of available credit across all your accounts, ideally you’re not using more than $6,000 of that at a given time.
Sometimes it’s possible to have too much of a good thing – and that principle can be true for credit cards. Just as there can be benefits to having multiple credit cards, some borrowers may run into trouble if they’re not careful with their plastic habits.
We’ve covered how multiple credit cards can potentially help your credit score, but it’s also important to realize that multiple cards could potentially knock down your score, too. Applying for a credit card usually requires a hard pull on your credit report, which may cause a temporary dip in your score.
While that drop shouldn’t be permanent, if you’re applying for several new cards in a short time frame, multiple hard pulls could have a negative impact on your score and possibly make it look like you’re having money problems.
If you struggle staying on top of your cards, dealing with multiple credit cards could exacerbate certain money issues. With several cards you’ll likely have more available credit (aka more spending power), so if you’re not careful, it can be easy to charge more than you’re able to pay off. And if you have a hard time keeping track of billing dates, late or missing payments could dent your credit score, too.
You may have heard of the “5/24” rule, which essentially says a certain credit card issuer won’t approve you for a new credit card if you’ve applied for 5 or more personal cards in the last 24 months. A major credit card issuer is rumored to follow this rule, though it can be tough to know how strictly they stick to it. It does, however, give you an idea that the number of cards you apply for in a given time period is something certain issuers pay attention to.
To return to our original question, there isn’t really a magic number. The right number of credit cards for you will depend on how responsibly you use them and what your spending habits are. If you’re interested in getting a new credit card to score perks like rewards or a signup bonus, just be sure you’re able to stick to good credit habits, like keeping your balances low and paying your bills on time and in full. Doing so can help keep your credit healthy, regardless of how many credit cards you have.
This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.