How Many Credit Cards Is Too Many?

A look inside an average American’s wallet will show you up to three credit cards most of the time. This leads to questions like, “how many credit cards are too many?” Unfortunately, there isn’t a one-size-fits-all answer to this question. It all depends on each person’s financial habits, the ability to repay loans, and the reason for getting multiple credit cards.

Having multiple credit cards can help or destroy your credit score — it depends on how you manage them.

When you use your credit card, your credit score information will be easily accessible to most loan institutions. If your score is low, it can be challenging to access some loans.

Is it Good to Have More Than One Credit Card?

Having more than one credit card has its advantages and disadvantages. It all depends on how you manage them. You get the chance to boost your credit score quickly because there are multiple avenues to generate information to be sent to the credit bureau monthly.

The downside is that this information can be positive or negative, affecting your credit score.

It’s very tempting to take a new credit card, especially when they differ from each other and offer you specific benefits. 

Why Have Multiple Credit Cards?

It Can Help Build Your Credit Score

One of the reasons people take credit cards is to build their credit score. Multiple credit cards will help you build your credit score faster. If you can make all payments on time, it will increase your credit score and your creditworthiness and give you access to more loan opportunities.

It Keeps Your Credit Utilization Score Low

Having one credit card will put a lot of strain on your credit utilization score. Because it’s the only one you have, you may have to use it all the time and use up to 90% of your monthly credit limit.

Naturally, this increases your credit utilization score, but with multiple cards, you can spread your credit limit among them and maintain a healthy credit utilization ratio.

Increase Your Credit Limit

More cards will automatically give you a higher credit limit because each card has its limit. Together, they will give you a higher credit limit than someone with one card. However, you should avoid maxing all of them at once.

More Rewards and Benefits

Each credit card company gives its users rewards and incentives for using them, and the more cards you get, the more benefits you enjoy. Different cards mean different benefits. Multiple cards will enable you to enjoy all available rewards.

Downsides to Having Multiple Credit Cards

Some disadvantages to having multiple credit cards include:

It Can Reduce Your Credit Score

Defaulting multiple credit card payments can plummet your credit score drastically. Try not to default on any payments to keep your credit score up.

Difficulty in Tracking Payment Dates

When you have up to five cards, you might have a credit card payment due often, and it can be challenging to keep track of all the due dates. This might unintentionally make you default on some payments, which negatively affects your credit score.

It would help if you wrote to your credit card companies to move your payment days to the same monthly dates.

Once you can keep track of your repayment dates and make your payments on time, your credit score will be acceptable.

How Many Credits Cards Is Too Many? 

More than two or three credit cards are too many. Why? The simple answer is there is an administrative headache in keeping track of paying so many bills. It’s bigger than an administrative headache, though. 

It’s hard to know how much you spend if you spread your accounts around too much.

One or two is plenty unless you own a business. Please keep it simple. Don’t chase rewards. Instead, focus on the value of a credit card, being that you can easily track spending.

Should I Take Out More Credit Cards To Improve My Credit Score?

Attack the spending. Paying off your debts is the best way to increase your credit score. Simplify your life by consolidating your credit cards so you can focus on understanding your spending. Addressing your spending is attacking the illness. Focusing on anything else is concentrating on the symptom.

What Should I Do If I Have four or More Credit Cards?

Consolidate. Focus on streamlining your outflows so you can understand what you are truly spending on. If that isn’t enough motivation, realize that you are increasing your chances of identity theft, or any theft, by having so many accounts open.

Borrow less. If you need so many cards, you might be spending more money (or time managing your money) than you need to.  

The Bottom Line

The number of cards you can have solely depends on your need for them and your ability to manage them. For some people, having two credit cards can be too many, especially if they can’t keep up with payments.

To know how many credit cards you need, answer these questions. How will each card work for me? What is the benefit of getting another card? Can I keep my balances low and pay back on the due dates? Do I want the administrative headache of tracking multiple cards?