How Many Credit Cards Should I Have?
How many and what type of credit cards should you have? The answer is not only different for each person, but also likely to evolve with your finances, spending, knowledge and the offers available to you.
Is It Good to Have Multiple Credit Cards?
Any benefit achieved with multiple credit cards ultimately depends on the cardholder and how financially responsible the cardholder is. According to Experian, Millennials have an average of 2.5 cards each, while Baby Boomers average 3.5.
Some prefer to live without a credit card and avoid the temptation to spend money they don’t have. Some do well with only one card earning cash back, while others keep two cards serving different purposes—one for everyday expenses and one for special dining out or travel experiences.
Some people (*cough*our entire staff *cough*) make a hobby out of maximizing rewards—travel rewards in particular. The veteran experts on our team keep binders full of credit cards and spreadsheets managing annual fee and monthly payment due dates. There are many routes to take with credit card ownership, but it is ultimately each cardholder’s choice as to which and how many credit cards will suffice.
How Many Credit Cards Should I Have?
The number of cards you should have depends entirely on your unique financial situation and spending history. The most important thing to ask is if you can pay off the full balance on every card every month. Having several cards is a lot of responsibility and if you doubt your ability to pay each monthly balance it might be best to avoid collecting multiple cards for now. In the long run, it is always best to resist the temptation to keep spending.
Live Without a Credit Card
Before choosing to apply for any credit card, remember not owning one at all is a perfectly valid choice. Using only cash or a debit card associated with a checking account works well for the roughly 20% of American adults who don’t own any credit cards. Despite popular belief, yes, it is possible to survive and thrive without a credit card.
When sticking with cash the only money available to spend is money on-hand or money saved. For some, that’s an effective form of budget discipline. Adding a debit card to the mix offers convenience and allows online purchases without the temptation to overspend.
The main downside to living without a credit card is the increased difficulty of building a credit score. You’ll need a solid credit score to take out a mortgage or for other large purchases, and it’s more challenging to get one without a credit card. There are other ways to build credit like a history of timely payments on student or car loans so building credit should never be the sole justification for taking on debt. Still, for those without other loans, a credit card paid in full each month is a convenient and relatively simple way to build a stable credit history for larger financial commitments (such as buying a home) down the road.
Another drawback to living without a credit card is that you’re passing up the potential to earn rewards on your spending. Some banks do offer debit cards that earn rewards for purchases, but these are few and far between. Debit cards and cash also don’t offer the same purchase and fraud protection credit card companies usually provide.
Get a Single Cash-Back Card
For those applying for a first credit card, we recommend finding a card with no annual fee that pays cash back rewards on every purchase. For instance, the Discover it® Cash Back card offers . This provides a great opportunity to build comfort with how rewards and credit cards work. Even if the credit line is not much to start, it may be enough to cover regular major expenses.
Cardholders may also consider a card on the Visa or Mastercard network, which are accepted by more retailers, especially abroad, than Discover. Top picks include the Citi® Double Cash Card, Chase Freedom Flex℠, Chase Freedom Unlimited® and Capital One Quicksilver Cash Rewards Credit Card.
Students applying for a first credit card who don’t have much income or credit history should consider student credit cards which are aimed at this specific profile.
Add Multiple No-Annual-Fee Cards Based on Where You Spend
When adding cards to your wallet, think about where you spend the most with your credit card and educate yourself on which cards offer extra rewards in these places. Keep your eye out for cards with no annual fees.
A smart starting point could be to find a credit card that rewards the most for grocery shopping. The Blue Cash Everyday® Card from American Express (Terms apply. See rates & fees.) offers . Another option is to apply for a card with a primary bank offering a single-rate earning cash back rewards card.
Canceling a credit card early on while building credit history could damage your credit score. Reducing credit lines may mean an increase in the credit utilization rate, which also can reduce your score.
Depending on your lifestyle, there may be other options for additional cards, alternative to those offering cash back rewards. Consider a card that rewards the cardholder with miles redeemable for travel expenses. The Bank of America® Travel Rewards credit card and the Discover it® Miles card are examples of these types of cards. Both cards are single-rate earning cards that allow cardholders to redeem miles as credits to eligible travel expenses (i.e. 2,500 miles = $25 travel credit). Check to make sure any travel-based credit card also offers no foreign transaction fees.
Specific retailer credit cards may also be convenient. These types of credit cards offer benefits and rewards tied to a specific retailer. Need a new work wardrobe? You may want to look at a Macy’s-branded card. Nordstrom, Home Depot, Best Buy and Amazon also all offer co-branded or store credit cards with unique benefits. (Amazon has a number of cards that offer increased rewards on their brands.) The Target RedCard™ Credit Card* offers , free shipping for online orders and a $0 annual fee.
Pay Annual Fees for Cards With Better Rewards
Sometimes specific rewards may justify paying an annual credit card fee. Consider loyalty to specific brands beyond a specific retailer, since most retailer cards don’t require an annual fee.
The key brands here involve travel. If someone stays most often at Marriott hotel properties or flies primarily with American Airlines, a Marriott Bonvoy or an AAdvantage-branded credit card may be just the ticket. Most of these brand-loyal credit cards do charge an annual fee. Try to pick the credit card offering the most likely-to-be-used benefits in excess of the annual fee.
Consider these travel brand-specific credit cards: United℠ Explorer Card, The World of Hyatt Credit Card and Alaska Airlines Visa Signature® credit card. All of these cards charge an annual fee, but each represents a specific brand loyalty for travelers. For example, The World of Hyatt Credit Card offers a free night’s stay annually at one of Hyatt’s lower-tiered hotels. That $95 annual fee beats room rates that could be well over $100.
When it comes to airlines, benefits vary when choosing an airline-specific card and considering which you’ll actually use is important. For example, Alaska Airlines offers convenient flights across the U.S. and it’s easier to achieve a preferred status on Alaska Airlines than with United Airlines, which often flies the same routes. Plus, the Alaska Airlines card offers an annual companion fare certificate that allows cardholders to take a companion anywhere from just $121 ($99 fare plus taxes and fees from $22). Add in the $75 annual fee for the Alaska Airlines Visa Signature® credit card and cardholders are basically getting an airline ticket of any value for a companion for about $200. In other words: The perks make the annual fee worthwhile, as long as they’re used.
There are some credit cards with annual fees offering enhanced rewards on grocery and gas spending. The Blue Cash Preferred® Card from American Express (Terms apply. See rates & fees) provides strong rewards in these categories: .
These high earning rates come with a $95 annual fee. Compare this to the lower earnings on the $0-annual-fee version of the card, the Blue Cash Everyday® Card from American Express.
Pursue Big Rewards and Welcome Bonuses
Pursuing big rewards and welcome bonuses can sometimes pay off, but it’s a risky game not everyone plays wisely. Big rewards often accompany much higher annual fees and high credit limits can make it tempting to spend more than necessary.
A clear example of a big rewards credit card that could pay off for the right cardholder is the Chase Sapphire Reserve®. For its hefty $550 annual fee, cardholders get a $300 credit towards travel purchases paid for with the card each year, Priority Pass airport lounge access, primary car rental insurance when they pay for their rentals with their cards, premium trip insurance, Visa Infinite privileges and 50% more points value when redeeming points for travel in Chase Ultimate Rewards® portal or through the Pay Yourself Back feature. Another popular credit card for those playing in the high end is The Platinum Card® from American Express. Similar to the Chase Sapphire Reserve®, The Platinum Card® from American Express has a hefty annual fee of $695 (Terms Apply. See rates & fees) and hefty benefits, including a large welcome bonus.
Credit Card Benefits Vary
Strategizing the unique benefits that each card offers is a key aspect of playing the credit game. When getting ready to sign up for a first credit card, instead of grabbing the first offer advertised, do some research. For example, for student credit cards, read about the non-student version of that card that the cardholder can graduate to and compare it to other non-student options out there.
As cardholders start to build a portfolio, they should consider how each card’s benefits can improve their lives in different ways (and increase a credit score). The key for any cardholder is to identify their own spending habits and how they can provide an opportunity for greater rewards, a stronger credit line and a lower utilization rate for future loan potential.
How Many Credit Cards Is Too Many?
Don’t overextend by signing up for too many credit cards at once.
Some people happily acquire credit cards solely for welcome bonuses and then cancel the card—often before the annual fee charge arrives after one year. This is known as “churning-and-burning.” Aside from the difficulty of keeping track of all this activity, there’s the added drawback of how it can affect your credit score. There’s also the possibility that even if your credit score remains solid, opening too many accounts in a short amount of time could result in your bank denying you a new card.
Before signing up for too many cards, consider what each card can offer (say, no foreign transaction fees, travel rewards or cash back on groceries or gas). Weigh the available bonuses against any card already in possession before making a decision. Don’t get seduced by bonuses—think about what you need.
How Many Credit Cards Should I Have to Build My Credit?
Again, this is a personal decision based on what you think you can handle financially. A primary card for everyday purchases is a great way to steadily and consistently build credit over time.
If you’re someone who has goals for major investments or purchases in the near future and know you would like to build your credit quickly, it may help to add several cards to the mix—especially those with specific loyalty programs so you can keep track of them in a more organized and categorized fashion, and for those with annual fees you have yet another opportunity to regularly pay off debt in a timely manner.
You really only need one credit card to start accumulating credit, but the more you have and the more responsibly you use them, the more opportunities you have to earn points and gradually increase your credit line.
How Many Credit Cards Can I Apply For At Once?
You can apply for as many credit cards as you want at any given time, though it’s not advisable. Not only can it be difficult to track applications and cards, it also doesn’t look good on a credit report. If you are someone who opens credit cards for welcome bonuses or temporary benefits then closes them out before having to pay any fees, this pattern is detectable and banks may decide you are ineligible when applying for certain new cards.
Is it bad to apply for multiple credit cards?
If you’ve recently begun to accumulate your card collection, it may also help to open credit card accounts slowly over several years. Opening multiple card accounts in a short period of time can actually hurt your credit score and can also jeopardize larger financial goals like getting a low mortgage rate when buying a house. Keep in mind closing out card accounts can also hurt credit scores so it is best to be selective while building your credit card portfolio.
Potential Issues With Having a Lot of Credit Cards
As mentioned above, signing up for a lot of cards at once in a short period of time can hurt your credit score. It’s risky business to grab bonus after bonus and spend more than normal to get it.
Is It Bad to Have Multiple Credit Cards?
While it is not inherently bad to carry multiple cards, cardholders need to know what their own limitations are and what they can handle. It can be difficult to manage payments for multiple credit cards at once. If someone signs up for six different cards all through different credit card companies, then that’s six different mobile apps or websites in need of regular checking to ensure on-time payments. Each card will also likely have a different payment due date.
If cardholders don’t pay off all monthly balances on time, late fees and spiraling debt aren’t the only problems: A growing credit utilization rate will most likely lead to a decrease in credit score. We all drop the ball sometimes in life, but recovering your credit after dropping the ball on credit card payments can be a long and grueling process.
Many people carry only one credit card. They have had one card for years, maintain excellent credit and earn substantial cash back rewards without having to worry about which card they’ll pull out and take with them on any given shopping trip or vacation.
Some folks successfully pursue big rewards and “churn-and-burn.” They continue to open new cards to chase bonuses or to capture the most deluxe travel rewards. This, of course, involves risk—but can also be rewarding.
Whatever future cardholders decide about how many cards to own, follow these three rules:
- Use credit cards whenever possible, making sure a reward is earned.
- Don’t buy anything with a credit card you wouldn’t normally buy with cash.
- Make sure to pay off each credit card balance in full each month.
To view rates and fees for Blue Cash Preferred® Card from American Express please visit this page.
To view rates and fees for Blue Cash Everyday® Card from American Express please visit this page.
To view rates and fees for The Platinum Card® from American Express please visit this page.
Frequently Asked Questions
Is it bad to not use a credit card?
There is nothing wrong with choosing to use cash or a debit card as your primary or only methods of payment in life. But being aware of the potential benefits of credit cards is important, especially if you’re considering putting your money toward bigger investments such as homes, cars or businesses.
Is it better to pay off one card or pay down several?
Focus on paying off one card at a time—preferably going from smallest debt to biggest (the “snowball” method) or highest interest rate to lowest ( the “avalanche” method) . The quicker you can pay off debt, the better for you and your credit score. You will be more efficient if you target one card and work your way up through instead of trying to spread out minimum payments across your multiple cards.
Will two credit cards build faster credit than one?
Yes, if you use your cards responsibly then having additional cards will generate consistent spending information for the credit bureaus each month, increasing your total credit limit and keeping your credit utilization rate low.