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Credit Scores and Reports

Two? Seven? Twenty? How many credit cards should I have?

What's key is ensuring access to more than one credit card network and a variety of rewards

Summary

Wondering how many credit cards you should have? Experts say at least two, one from each card network, one from each type of rewards, and no more than you can handle

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It would be easy to fill up a wallet with just credit cards. A card to maximize airline miles. A card targeted at your favorite hotel chain. A card that gives you cash back on groceries. Even a card that earns you points when you spend at NFL games. So, where to begin? And where to end?

How many credit cards should I have?

The short answer: you should have at least two – ideally each from a different network (Visa, Mastercard, American Express, Discover, etc.) and each offering you a different kind of rewards (cash back, miles, rewards points, etc.). How many credit cards is too many? That depends on the individual – you should never have more than you can handle.

Experts say the number of cards one should have varies according to individual and circumstance. “Generally speaking, there is no one perfect number,” said Ethan Dornhelm, a vice president and former principal scientist for FICO, a data analytics company behind the credit score most often used by lenders.

While the number varies by generation, credit score and other factors, the average American has 3.1 credit cards, according to a 2017 survey by the credit reporting agency Experian.

Two questions to up your credit game

To ensure a mix of credit cards and keep your credit score climbing, credit expert John Ulzheimer suggests to ask yourself two questions about the cards in your wallet:

1. Do you have cards across more than one network?

If you have three cards, but all of them are Mastercards, this could be a problem if you run into a merchant who only takes Visa. An example? Costco only accepts Visa now.

2. Do you have a low credit card utilization ratio

Your average balances across all your cards for the past 24 months “should represent no more than 10 percent of your overall credit limit,” Ulzheimer says.

Credit utilization – how much credit you’re using each month, on average, of all the credit available to you from all your cards combined – is a key component of your credit score.

If you can add another credit card while keeping your overall spending the same, you’ll lower this ratio – and boost your score.

Two? Twenty? The answer is personal

That former number sounds about right to John Corcoran, a hotel industry executive in Aspen, Colorado.

He’s got two for personal use – both airline mileage cards – and a third for work. He added the second mileage card solely for the points bonus, and is thinking about dropping it before the $90 annual fee comes due. “I don’t like credit cards,” he said. “I don’t like debt.”

On the other end of the spectrum is Naomi Sachs, an international business executive in San Rafael, California. Sachs estimates she has 20 or 30 cards “sitting in a sock drawer, unused” – generally retail cards she signed up for to lower the cost of a purchase at that store or credit cards she acquired for the points boost.

Sachs is carrying around in her wallet about 10 more cards, of which she uses two or three with regularity. As for cash? Maybe there’s a $20 bill in there somewhere. Debit? “I don’t put anything on debit, ever, ever,” she said.

Instead, she charges strategically, and checks her card balances a few times a week to stay on top of her finances. “I aggressively try to maximize my spend, for almost every single dollar, every single time,” she said.

Credit expert John Ulzheimer suggests two things that can help you determine the number of cards that is right for you. Always keep your overall credit card utilization low, and secure access to more than one credit card network.

While merchants in the U.S. accept the big four card networks – especially Mastercard and Visa, and, to a lesser extent, American Express and Discover – you can still find places where some of them are not accepted. Costco is one example. The warehouse club switched in 2016 from American Express as its card partner to Citi, so now the only card Costco accepts is Visa.

And if you travel abroad, you should pack credit cards from a variety of card networks. While Visa and Mastercard are most universally accepted, and American Express signs are increasingly common in store windows across the globe, you will inevitably wind up in a place that doesn’t accept the type of credit card you have with you.

Beyond those two key elements, Ulzheimer explains, many approaches are valid, so long as they work for you.

“Generally speaking, there is no one perfect number.”

How many cards should you have if…

Want to get more specific? Here’s a list of some particular situations you may find yourself in, and some experts’ thoughts on how that might affect what kinds of cards, and how many, you may want to carry in your wallet:

You’re new to credit cards, or just recovering from a bankruptcy or other bad credit incident

Start with one card, a secured card if necessary, then add a second card when you can prove to yourself that you are making your payments on time and paying your bill off in full each month, says Netiva Heard, a credit counselor in Chicago.

“It’s a learning period,” she said. “That’s why you start with just one card first, to get adjusted to those good habits.”

You want to take advantage of rewards programs

Cards that don’t offer rewards “are a complete waste of your time,” Heard says. She recommends thinking about what rewards would benefit you the most, and whether you want to pay an annual fee to get them.

Cards that don’t charge an annual fee generally come with lower introductory bonuses than cards that do and may not be as generous with rewards points on day-to-day spending. But be careful that you don’t sign up for more rewards cards than you can manage to juggle.

Heard advises most people to keep no more than three to five credit cards total in their wallets. Ulzheimer said two rewards cards seems like more than enough – one for airline points and one for cash back.  

You plan to buy a new house or car soon

You should stick to the number of cards you already have, at least temporarily. Don’t open even one new credit card within at least six months of applying for a so-called installment loan. Opening a new card will lower your score by a few points due to the hard inquiry on your credit, “and you want it to be in the best shape possible when you go out to get that expensive loan,” Ulzheimer said.

That said, he added, installment lenders will pay the most attention to whether you’ve had a mortgage or auto loan before, and paid it off on time, and whether you tend to pay off your bills in general on time.  

You want to improve your credit score

This is not a reason to get a new credit card, Ulzheimer said. “Opening a new card can actually backfire,” he said, because it will, at least initially, lower your score.

Heard said she often sees clients denied loans not because of their credit scores, but because too much of their income is going to debt payments each month. Worry about a high debt-to-income ratio first, she advised.  

You’re neck-deep in debt

If you have a mountain of bills, it is best to put whatever credit cards you have aside in favor of a debit card, or cash, Ulzheimer said.

If you need to close your credit cards to avoid using them, then do it, but know that every time you close a credit card, it can lower your score, he said – because it may reduce your available credit, thus increasing your aforementioned credit utilization ratio.  

You need a better interest rate to pay off existing credit card debt

Balance transfer card introductory rates of 0 percent APR can be helpful to those who are carrying high-interest balances, pay their bills on time and never miss minimum payments, Ulzheimer said. But they’re only available to consumers who already have decent credit.

Note, too, that balance transfer cards come with their own hazards, such as balance transfer fees – which typically run about 3-5% – and high-interest rates that kick in at the end of the introductory period, or even, in some cases, when the cardholder misses one payment.

Think of balance transfer cards as a tool, Ulzheimer said. “Use it properly and it will buy you some time to chew into the balance and eventually pay it off.”

You don’t want to carry around lots of credit cards in your wallet

If your wallet is bulging from plastic and metal cards, follow Sachs’ example and stow some at home, Ulzheimer said. “I never advise people to close credit cards, because it can hurt that debt-to-credit limit ratio,” he said.

The one exception is if someone is going through a divorce, he said. Then it’s best to limit the amount of damage an angry spouse can do to your finances, and let both parties establish credit on their own.

So, whether you have two or 20 cards doesn’t really matter. What’s important is that your cards give you access to more than one network and offer you the rewards that best meet your needs (which can change over your lifetime).

And, of course, you need to be sure you’re not juggling so many cards that you can’t keep track of all the payment due dates The whole point of having two to 20 or more credit cards is earning points or cash back on your everyday spending that you pay off every month. All the while, keep your credit utilization low so that your credit score climbs.

See related: Q&A: Does being an authorized user on too many cards hurt my score?10 worst credit card mistakes

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