It’s nearly impossible to pay for your purchase at any well-known retailer without receiving an invitation to apply for the store’s credit card.
Online shoppers often get bombarded with popups for credit cards that feature special perks and discounts for loyal users.
Medical professionals promise you can easily afford to perfect your smile or straighten your spine with help from a medical credit card. Oh, and let’s not forget the credit card offers from car dealerships, banks, and airlines that probably crowd your mailbox.
With generous lines of credit available from so many different sources, you might be wondering, “Is it okay to apply for all of this stuff? How many credit cards should I have?”
To answer the popular question "how many credit cards should you have?" it really depends on your financial goals, credit history, and ability to juggle multiple accounts.
We’ll break it down for you below so you can make an educated decision regarding the number of credit cards you need.
What factors influence your credit score?
FICO determines your credit score using 5 different factors, none of which rely on the total number of credit cards you have. Your payment history makes up a whopping 35% of your credit score, while your current amount of reported debt affects 30% of your score.
The amount of time you’ve had an established credit history also influences your score, as well as the types of credit you utilize and the length of time since you opened your most recent account.
So, how do credit cards affect this formula?
Well, let’s say that you have 1 Visa credit card, 1 student loan, and one auto loan. These are three different forms of credit, so this helps the part of your score that benefits from a mixture of credit types.
Now, let’s pretend you’ve had the Visa credit card since 2007 and have never missed a payment. This influences your payment history, and it also shows lenders you’re responsible since you’ve had the card for so long. Way to go, imaginary card holder!
Now for some bad news...
Your imaginary Visa card has a $10,000 limit, and you’re currently carrying a $8500 balance. That $8500 balance means you’re utilizing 85% of your available credit for that card, which isn’t good if you’re trying to stick with the recommended utilization rate of 30% or lower per card.
In this hypothetical situation, some experts may recommend paying off your balance as soon as you can to lower your utilization rate. However, you may also find it beneficial to get approved for 1 or 2 additional credit cards and then transfer part of your balance to these cards.
For example, let's say you decide to apply for 2 more Visa cards, each of which has a $10,000 limit. If you transfer $3,000 to each new card, you’re only utilizing 30% of the available credit for each Visa. This also drops your utilization rate from 85% to 25% for the Visa you’ve had since 2007 since you only have $2,500 remaining on the card.
Keep in mind that if you go this route, you’ll probably get a monthly bill for each new card, plus the card you already had.
It can be difficult to keep track of multiple accounts, and you may struggle to afford the payments for three separate cards. Also, you might end up with hard inquiries on your credit report, which can lower your score.
How much this matters depends on your short-term and long-term financial goals.
What are your financial goals?
Depending on your credit history, the number of credit cards you have can potentially help you achieve your financial goals. If you want to make your credit score soar after a Chapter 7 bankruptcy, you might find it beneficial to apply for credit as soon as you receive your discharge.
Just don’t go crazy with the credit card applications! The average American has 3.4 credit cards, but you might want to start your credit rebuilding journey with 1 or 2 of the best cards for bad credit.
If you plan to buy a home sometime in the next few years, you’re typically going to need 2 to 4 lines of credit to get a mortgage loan. In this scenario, applying for a couple credit cards may help you, but applying for too many in a short period of time can lower your FICO score.
Applying for too many cards at once also makes it look like you desperately need credit, and that can scare potential mortgage lenders.
But if you’re perfectly happy renting your home and aren’t recovering from a bankruptcy or other credit-damaging situation, how many credit cards can someone like you have? Well, there’s no official answer, but you can basically have as many as you can handle.
But really, can you handle 1,497 credit cards?
Let’s be real here: Most of us can’t. Even if you set up automatic bill pay so that you never miss a payment, can you even afford to make monthly payments for that many cards?
Before you fill your wallet with plastic, figure out how much you can afford to spend paying off your cards each month.
Many credit card companies expect you to pay a minimum of 1% to 3% of the balance you owe them each time they mail you a bill. If your card provider sends a statement once a month, and you’ve maxed out your $500 card, you’ll owe around $15.
However, some companies require you to pay a specific amount each month until your balance is reduced to $0. Just to be overly cautious, let’s assume the minimum monthly payment for each card is $50.
Determine how much disposable income you have, and then divide that number by $50. If you have $200 to spend on whatever you want each month, you can get 4 new credit cards.
Just keep in mind that you’ll potentially end up generating tons of interest on your balance until it’s paid in full, so you may want to make more than the minimum monthly payment. If that’s the case, consider getting 2 cards instead of 4.
Here’s the bottom line:
If you’re still wondering how many credit cards is too many, there’s no one-size-fits-all answer.
Sometimes prepaid debit cards are beneficial if you need separate accounts to organize your spending habits, but they won’t help you establish a credit history. That’s one of many reasons why people choose to get multiple credit cards rather than multiple debit cards.
Figure out your financial goals, and be honest with yourself about how good (or bad) you are at paying bills on time.
Don’t let a pushy employee or the thrill of saving 10% on an online order convince you that you need yet another credit card - unless you’re prepared for the responsibilities that come with it.
How many credit cards do you have? Are you happy with that number?
Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.
This article was last updated May 13, 2019 but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.