According to a Transunion survey, the average American consumer had 2.69 credit cards in the first quarter of 2017. However, credit usage habits differ from one person to another—most individuals have one card, others operate with two cards, while still a portion of consumers have filled their wallets with 5 or more cards. As such, the question of the number of cards that you should have at any given time has several possible answers.
Some factors that may determine the number of cards that you can have include your budget and spending power, needs and lifestyle, credit history and rating (score), and your tolerance for utilizing credit cards. It is important to note that you should not carry a credit card’s balance from one month to another. Also, you should restrict your usage within your ability to repay the charges, as timely repayment is more critical than the number of cards you have. Finally, you should ensure that each of your cards has a distinct use, and is not overused.
Situations and the ideal number of cards
Below are some examples and advice from experts concerning how these circumstances can affect the kind and the number of cards you have:
If you have never had a credit card, or you are recovering from a serious credit crisis or bankruptcy
You should obtain one credit card, and if you are learning how cards work, it should be a secured one. After you are certain that you can manage to pay the card’s balance and other bills in full and on time, you can get a second card, if you deem it necessary. Start with one card to get used to good card management habits. This card will help you build your credit if you pay on time and in the full amounts. You can also seek the services of experts at boostcredit101.com to see how you can improve your credit.
If you wish to benefit from rewards programs
You should consider what rewards you would gain from most and if you are ready to pay the annual fees to get those cards. Most cards with no annual fees generally have lower introductory bonuses than those that do, and the former do not award rewards points as generously. Nevertheless, you need to be careful not to have more cards than you can comfortably manage. One expert advises having between 3 to 5 cards. Another expert says that 2 cards are enough—one to get airline points and another for cashback. Your needs and abilities to manage the cards should determine the best number for you.
If you want to boost your credit score
Getting an extra card will help you to increase the amount of credit at your disposal; thus, you can spend more but still have a safe utilization ratio (amount spent compared to credit limit). A lower ratio is preferred, as you should keep it lower than 30% for a good credit score.
If you are deep into debt
It is advisable to put aside the credit cards that you have in case you have hordes of bills to pay, and opt instead for a debit card or cash. At times, closing the cards’ accounts to avoid using them can be considered, but also note that doing so may lower your credit score, as it will decrease your available credit and raise your credit utilization ratio.
If you intend to take out a loan soon to buy a house or car
You should momentarily stick with the cards you have and not apply for a new one if you plan to apply for house or auto loans (installment loans). Avoid getting a card within at least six months of requesting the loan. Applying for a new card will make your score drop by a few points due to the hard inquiry, whereas you want it to be in the best possible shape when you go to ask for the loan.
In a market with plenty of credit cards having different perks and benefits, you can choose to have many cards for various purposes. You can, for instance, have a card that pays more rewards on groceries, another with more rewards on meals, and another without foreign transaction fees. You could also sign up for cards to take advantage of promotional offers for those with extended promotional periods. Also, several cards can help you separate personal and business spending. Conversely, many credit cards can be a problem if you are not responsible with spending, you are not conscious of paying balances back on time, or your utilization ratio is high.