How Many Credit Cards Should I Have At One Time?

Having a credit card can be a wonderful thing. It provides access to instant funds for things you might not have the savings for but that you want — or need — right now. This can be things like airline tickets for a big trip, some new furniture, or even an unexpected medical bill.

A credit card can also get you into financial trouble if you don’t use it responsibly. Building up too much credit card debt can hamper you with mandatory monthly balance payments, which must be made in addition to your regular monthly bills. Credit card debt also compounds at a notoriously high rate of interest.

Given that many consumers get into financial trouble with just one credit card, is it possible that having more than one is beneficial? The answer, surprisingly, is that it can be – but only if you manage them responsibly. Here are the key points you should consider when asking how many credit cards you should have.  

How Many Credit Cards Should You Have?

Typically, lenders like to see that you can manage multiple lines of credit and loans at the same time. This means that you have access to lots of credit, keep your balances low and make your payments on time. Why is this important?

Your credit card account is about more than money. In addition to providing you instant access to thousands of dollars whenever you need it, having a credit card can also bolster your credit score. Your credit score is a three-digit number between 300 and 850 that is calculated using information from your credit reports. A higher credit score gives you a better chance to get a loan at a better interest rate for things like a home mortgage down the road.

When assessing how many credit cards you should have, it first goes without saying that you should always manage your debts wisely. Whether you have one card, two cards or five cards, they should all be kept at a low balance to keep your monthly payments manageable.

In addition to your demonstrated financial discipline, most lenders like to see that you have a diverse number and range of credit accounts. This means things like car payments, and student loan payments, as well as credit cards.

The reason lenders like to see you carrying multiple accounts is that it shows them you are a responsible consumer. When you incur debt, you pay it back. Because your credit score is good and you handle credit well, a lender will be more likely to do business with you and might even entice you with a lower interest rate than other customers qualify for.

How Many Credit Cards Does The Average American Have?

According to the consumer credit recording bureau Experian™, in Q3 of 2020 Americans held an average of 3.84 credit card accounts. The average combined credit limits on these cards was $30,365 and the average balance was $5,315 per card. The number of credit cards held by a person skewed higher by age group, with the older baby boomers having the most at an average of 4.61 per person.

Can You Have Too Many Credit Cards?

As long as you’re able to keep your balances low and make at least the monthly minimum payment on all your cards, it’s okay to have multiple cards.

However, at a certain point, having several cards may get confusing and difficult to manage. If you lose track of paying off one of the balances, this can damage your credit score. It can also cost you money because your balance will continue to grow at a very high rate of interest. Even if you’re trying to pay down the balance, it can seem like you can’t catch up. Paying down credit card debt can be a financially and emotionally draining experience that you want to avoid.

Overall, the right number of credit cards you should have is dependent on your financial situation.

Does Having Multiple Credit Cards Affect Your Credit Score?

Having multiple credit cards can potentially have either a positive or negative affect on your credit score. A key concept that should guide how many credit cards you should have is called your credit utilization ratio. This figure reflects the percentage of the combined balance, or debt, you hold on all your credit cards against the total possible limit of those cards.

For instance, if you’re carrying a balance of $2,000 on all your cards and the combined limit on those cards is $20,000, your credit utilization is 10%. This percentage is significant because it is weighted heavily when your FICO® Score and VantageScore are calculated.

The higher your credit utilization, the more you’ll be seen as a risk to lenders because they’ll think you’re too reliant on credit. Simply put, a higher percentage is more likely to negatively impact your score.

Also related to credit utilization, your current and delinquent balances are moderately important to your score, separate from your credit utilization. The lower you can keep your balances across all of your debts, the more positive impact it will have on your credit score.

Pros Of Having Multiple Credit Cards

• Credit card rewards points: Most credit cards today have some sort of rewards points to attract new customers and entice users to use the card more. The way credit card points work, in a nutshell, is that you spend with the credit card and then you get “rewarded.” Reward structures vary from card program to card program and can be anything from airline miles to hotel points to just plain cash. Be careful when racking up those miles, however: you still need to be able to pay back your balance.
• The potential to improve your credit score: As described above, having multiple credit cards can have a positive impact on your credit score, as long as you keep the amount of total debt on your cards low relative to the combined top limits of the cards.
• Backup in the event of a financial emergency: No matter how well you budget and save for a rainy day, life has a way of presenting sudden financial challenges. A costly repair to your home or car or a sudden health expense must be dealt with immediately, regardless of whether you have funds available. A credit card can be a savior in those moments.
• Help you stay organized: If you only use each credit card for one type of purchase, it’s easier to track expenses. For example, if you have to travel for work and need to track your expenses, you can have a card dedicated for that purpose.

Cons Of Having Multiple Credit Cards

• Credit card fees: Even if you keep your balances low and make your monthly payments, a credit card may cost money to use. Some cards charge an annual fee, typically from $95 up to $500 or more, just for holding an account. There are also stiff fees ($30 and more) for missing a monthly minimum payment. Other fees include penalties for exceeding your credit limit, as well as a percentage (usually 3% - 5%) of the total on any balance transfer or cash advance. When you hold multiple cards and lose track of what is happening with them, you can quickly add more debt through fees and penalties.
• High interest rates: Any debt you hold on a credit card accrues interest at an incredibly high rate if you do not pay off your balance in full each month. In August 2023 the average credit card interest rate was 24.69% according to Forbes. By contrast, the average rate on a personal loan, for a person with a high credit score, was about 6% - 10%.
• The potential to lower your credit score: If you maintain relatively high debt on your credit cards or have a history of making payments late or not at all, your credit score will go down.
• An increased chance of appearing risky to lenders: Lenders usually like to see your ability to manage a few credit cards by keeping balances low and making payments on time in your credit profile. It raises red flags, however if you have half a dozen or more cards because it gives the appearance of financial instability.

How Many Credit Cards Can You Apply For At Once?

Nothing is stopping you from applying for more than one credit card at a time, but be aware that each time you do so, the credit card company will do an inquiry into your credit activity. Having multiple inquiries can raise a red flag to lenders. According to Experian™ data, people who have several inquiries on their credit reports in a short period are more likely to overextend themselves and default on their debts.

How Often Should You Apply For A New Credit Card?

You should only apply for a new credit card if you have a good reason, such as the offer of a great rewards program you know you’ll use. While it’s okay to have multiple credit cards, you should try to wait at least 90 days or more between credit card applications. This will protect your credit score from the negative effects of too many credit inquiries.

When Should You Have More Than One Credit Card?

Any time you consider opening a new credit card it should be for a good reason. These typically include a particular benefit the card offers or to bolster your credit score and enhance your future ability to borrow money.

• You’re a responsible borrower: You know you have good financial discipline. You live well within your income, pay your bills and pay your debts. You know that managing a credit card well can boost your credit score.
• You have minimal debts: Another good way to look at your financial health — and how potential lenders view you — is to calculate your debt-to-income ratio. This is a percentage that expresses the amount of your gross monthly income that is dedicated to your existing monthly debt payments. A score below 40% is considered very good, while a score over 50% can be seen as problematic.
• You want to take advantage of credit card rewards: Most credit cards now offer some sort of rewards program whereby every dollar spent builds a stock of something you value, whether it’s free airline miles, hotel points or just plain cash. Some people will run almost all their regular expenses through their rewards card — not just groceries and trips to the hardware store, but their mortgage and car payments as well. This can build their rewards account very quickly. However, they must also have the discipline to pay those monthly credit card bills off every time.

When Should You Avoid Getting A New Credit Card?

There are plenty reasons you may want to avoid taking out a new credit card. If any of these common scenarios apply to you, think twice before even applying.

• You’re paying off existing credit card debt: “Paying off” implies that you can only pay part of the debt each month due to constraints on your income. And even if you can make the minimum monthly payments, the balance is sitting there growing at likely more than 20% interest. Until you have the current credit card debt under control, it might not make sense to take out another card.
• You’re working to improve your credit score: We’ve seen that having two or three credit cards in your name can be beneficial to your credit score, provided you keep the balances low and you make the regular payments. If you already have five or more cards, however, adding another can hurt your credit score. First, having multiple credit inquiries in a short time reduces your score. And second, having too many cards is a red flag for lenders who may wonder why you require so much credit.
• You’re applying for a loan: If you’re applying for a loan and the lender sees that you are also applying for a credit card, it raises a red flag for the lending institution. They may lose confidence in your ability to the pay back your debt to them. It’s probably best to secure the loan first, make several payments on that debt, and apply for a credit card no less than 6 months later.

5 Tips For Managing Multiple Credit Cards At Once

As we’ve discussed, there are many advantages of holding multiple credit cards at once if you’re able to manage several accounts wisely. So, what are the key attributes of good credit card discipline?

1. Make On-Time Monthly Payments 

The first key to juggling multiple credit cards at once is to make your monthly credit card payments on time. Not only are you paying down your debt, you’re also avoiding costly penalties for non-payment or late payment. Penalties are anywhere from $30 to $50 for each late payment.

Perhaps even more damaging, if your payment is more than 30 days late, a credit card issuer may report it to one of the three major credit bureaus. Once that happens, your credit score will suffer serious damage.

Another reason to make your payments is to keep your card’s high interest rate from growing your debt even further. To avoid paying interest, try your best to pay your credit card balance in full on or before its due date.

You can also avoid paying interest by getting a credit card that has a 0% interest introductory period. These cards incentivize you to sign up by offering interest-free periods that can last as long as 21 months. To qualify, you typically need to have an excellent credit score.

Finally, the easiest way to avoid missed payments is to set up an autopay feature with your credit card account. You’ll provide the credit card company the account and routing number for your bank account and funds will immediately be transferred. If you want to pay more than the minimum one month, you can always do that yourself.

2. Maintain A Low Credit Utilization Ratio

Whether you have one card or five, it’s important that you maintain a low credit utilization ratio across all of those accounts. This figure reflects the percentage of the combined balance, or debt, you hold on all your credit cards against the total possible limit of those cards.

For instance, if you have $1,000 of combined balances on three cards, and the total credit limit on those cards together is $10,000, your credit utilization is $1,000/$10,000, or 10%. This is considered a low utilization ratio, and it contributes to a higher credit score and a greater chance that you’ll get a loan when you need one.

3. Stay On Top Of Your Spending

No matter what, you should always have a budget and keep a close eye on your spending. Keeping to your budget simply means spending less each month than your net income.

Monthly credit card payments must be factored into your budget. In fact, paying down your balances is extra important, since the penalties for late payments and the high rate of interest can build your credit card debt very quickly if you are not on top of it.

Also, remember that a credit card is not a magic money machine. It’s a great tool for making large, but necessary, purchases from time to time. It’s also good as insurance for unexpected expenses, such as the deductible on an insurance claim or an expensive vet bill.

But a credit card can also lead to danger because it is some of the most expensive money you can borrow. Late payment fees and interest rates on credit card debt are extremely high. You should always be aware of this before you swipe your card.

4. Use A Personal Finance App

To make managing multiple cards easier, sign up for a personal finance app such as Rocket Money℠. This powerful tool allows you to view all of your credit card accounts in one place and prompts you when payments are due. It can also alert you if unusual or possibly fraudulent activity is happening with your accounts.

The Rocket Money app helps you manage your entire budget, including bank accounts, your mortgage and all your other monthly payments. As long as you have access to the internet, you can view recent spending, transfer funds and make payments from your mobile device, tablet or laptop.

5. Understand How Credit Cards Affect Your Credit Score

Before you apply for a new credit card or cancel one, it’s important to understand how it may affect your credit score. If you have multiple cards, keep your balances low and make regular payments on time, this will have a positive effect on your credit score. However, if you apply for multiple cards within a short period of time, such as 6 months, your score will go down because there will be multiple hard inquiries into your credit.

Your credit score will also go down if you maintain high balances on one or more cards, or if you frequently fail to make your payments on time.

Frequently Asked Questions (FAQs)

Is it good to have multiple credit cards?

It can be good for your credit score to have multiple credit cards, but only if you keep your balances low and make your payments on time. You might want to have cards with a variety of rewards programs you’ll find useful. If you have too many cards and trouble paying down the balances, your credit score will go down and you’ll have trouble getting a loan when you need one.  

How much of my credit card should I use?

In determining your credit score, the credit ratings bureaus will look at your credit utilization ratio. This figure reflects the percentage of debt you have on your card(s) compared to the combined available credit on them. Experts recommend you keep this figure below 30% to maintain a good credit rating. If a necessary big expense takes you over this amount, act quickly to pay down your debt to below 30% as quickly as possible.

Can I have two of the same credit card?

Some banks will allow you to have two of the same card, but many lenders will not approve your second application – each will have their own rules. One way you could benefit from two of the same cards is by becoming an authorized user on one of the cards, while maintaining the other as a primary user. Be sure to read whether you are limited in the amount of rewards points you can redeem at one time as the lender may impose a maximum limit.

Is it okay if I don’t have a credit card?

Yes and no. It’s good to have a credit card because opening and maintaining a credit card, even one with a low credit limit, can boost your credit score. It shows that you can build credit and pay your debts over a period of time. But you can build a good credit rating without having a credit card. If you have other loans that you make regular payments on, like a car loan, this will also contribute to keeping your credit score healthy. Some companies may even assist you in reporting completed utility payments to the different credit bureaus to help you build your credit history.

The Bottom Line

It can be beneficial to your credit score if you maintain several credit cards at the same time. If you keep balances low and make your payments on time, it shows lenders that you can build up credit and pay your debts. A strong credit score can help you get approved for a loan, such as a home mortgage, in the future. Many cards also offer you rewards for paying bills or buying groceries – everyday things you’d have to pay for anyway, even if you didn’t have a credit card.

To keep track of multiple credit cards and your other bills and expenses, consider signing up for a personal finance app like Rocket Money today.