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How Many Credit Cards Should You Have?

Nov 26, 2022 | Uncategorized

Credit cards have many great advantages: strong fraud protection, rewards, help you build your credit, and more. They can be a great financial tool when used correctly, So, how many credit cards should you have? 

There’s no simple answer on how many credit cards you should have; any benefit that comes from holding multiple credit cards depends on how financially responsible you are with your credit. 

We’ve done some research to help you better understand how many credit cards are best for you.

Having at least one credit card is best. When you apply for loans, an apartment or a job, your credit score is evaluated to ensure that you are financially stable. Without this information, it can be difficult to determine this. 

Should You Have Multiple Credit Cards?

There’s no real answer as to whether you should own multiple credit cards. Having more than one credit card can be very helpful for the rewards and advantages they offer. 

If you do have more than one credit card, it’s crucial that you stay on top of payments to maintain a good credit score. 

Pros of Having Multiple Credit Cards

Credit Utilization

In addition, when you have more than one credit card, this can help your credit utilization ratio. Credit utilization ratio is the amount of revolving credit you’re currently using, divided by the total amount of revolving credit you currently have available. Essentially, it’s how much you owe, divided by your credit limit. If you owe $500 and your credit limit is $2,000. Then your credit utilization ratio is 25%. Generally speaking, it’s good to keep your credit utilization below 30%. 

Keeping a low credit utilization is one of the key factors for maintaining a high credit score. With two or more credit cards, you can have a lower utilization ratio as you can split the amount you owe. For example, if you owe $500, and have two credit cards with limits of $2,000. Your ratio would be 12.5% (500/2,000). 

While carrying multiple credit cards can certainly be helpful in improving your credit score, please keep in mind that opening new credit card accounts can have a negative impact on your credit score. This is because it decreases the average length of your credit history. 

Maximize Your Rewards

Owning more than one credit card unlocks your potential to reap multiple rewards and benefits. There are credit cards that have grocery and movie theatre rewards, ones that have travel benefits, and more. Owning more credit cards gives you a better chance at receiving more rewards than you would with one card.

Back Up

Many stores and merchants don’t accept American Express credit cards, as they charge them higher fees than other credit card networks like Mastercard or Visa. Having a backup credit card will come in handy. 

Caring a back-up is also helpful if one of your cards gets lost or stolen.

Cons of Having Multiple Credit Cards

Annual Fees

Credit cards have annual fees. The more credit cards you have, the more fees you’ll pay each year, which could get very expensive. 

That being said, there are “no fees” credit cards that you can consider. 

Risk of Overspending

With more available credit, the risk of overspending can become an issue. Higher credit limits can also tempt individuals to spend money they don’t have. To avoid this, it’s important to spend only what you can pay off, and to make these payments on time and in full. Having fewer credit cards can also lower the risk of overspending. 

More Bills to Oversee

With more credit cards comes more financial responsibility. Each card will have a monthly bill statement that you will need to manage. You will have to keep track of each card’s interest rate, credit limit, and monthly payment.

It’s up to you to determine if you can handle several credit cards.