How many credit cards should I have?
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BLUEPRINT
Updated 11:04 a.m. UTC Nov. 14, 2023
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While personal finances are, well, personal, many general principles still apply. This rings particularly true for credit cards, which can be powerful tools for earning rewards, establishing your credit and helping you qualify for lower interest rates on car and mortgage loans.
If you’re wondering how many credit cards you should have in your wallet, here are the best practices for opening, closing or keeping cards, in order to maintain an excellent credit score.
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How many credit cards should I have?
The answer will vary depending on your spending habits, income and lifestyle needs, but most people should have roughly two to three credit cards in their wallet. These credit cards should be acquired over time, rather than in a short span of a few months. Here’s a good example of how one may hold multiple credit cards:
- Credit card #1: A starter card to establish credit score and history.
- Credit card #2: A rewards card that tends to offer better cash-back or travel miles than the first credit card, acquired at least six to 12 months after opening the first credit card.
- Credit card #3: Another rewards card that complements the earning rates or benefits on the first two cards.
Is it good to have more than one card?
Having multiple credit cards can help increase your credit score and earn you even more rewards, but only if you’re able to make your payments on time and in full every month. Opening more than one credit card can be risky for those who are subject to spiraling into debt.
To explain this concept further, we’ll discuss the relationship between credit cards and your credit score. Namely, we’ll discuss your FICO credit score, which is a type of scoring model often looked at by banks and loan providers. The five factors that determine a FICO score are:
- Payment history (35%): Are you able to make on-time payments?
- Amounts owed (30%): How much do you collectively owe on your credit cards and other loans you may have taken out?
- Length of credit history (15%): How long have you had your credit accounts open?
- New credit accounts (10%): How often do you open a new credit card or apply for a new loan, resulting in a “hard inquiry” on your credit history?
- Types of credit used (10%): Have you diversified your credit types, ranging from credit cards to various types of loans?
Opening new credit cards can have positive and negative impacts on your credit score. For one, having more than one credit card can be a good thing as it increases the total credit limit available to you. For example, if you owe $2,200 to your credit card and loans combined but only have a $4,000 credit limit on your card, you’re using more than 50% of available credit. Meanwhile, if you carry multiple cards — with multiple limits — you can reduce the total amounts owed, which is a whopping 30% factor that determines your FICO credit score.
On the contrary, opening credit cards in a short time frame — such as every few months — can ding you for too many new credit accounts. However, it’s worth noting that this only makes up about 10% of your credit score. If you’re interested in opening new cards, you should always wait at least six months or — even better — a full year before you add a new card to your credit portfolio.
How to determine what credit card rewards are best for you
Your first credit card likely won’t be your end-all-be-all card. In fact, you may start by opening a credit card with an issuer you already bank with. After all, many people prefer the convenience of having their personal finances streamlined — with just one login to manage.
However, if you’re willing to get past the convenience factor, it’s worth shopping around to find a credit card from different banks that best suits your needs.
- Are you a frequent traveler that’s always on the road? Opening a travel rewards card can grant you bonus points on airfare, hotel and everything in between, while you’ll receive no foreign transaction fees for your international trips.
- Do you have a large family with lots of expenses? You may want to look toward a card that offers an excellent cash-back rate at grocery stores, putting more money back in your wallet.
- Are you trying to pay down existing credit card debt? A card that offers a 0% introductory APR on balance transfers can help you minimize the interest fees paid on your debt, getting you back on the right track.
Comparing credit card benefits
There are dozens of rewards credit cards on the market. Generally speaking, the higher the annual fee, the greater the benefits offered. Below, we’ll compare four popular credit cards so you can get a clearer picture of the potential perks you can receive as a cardholder.
Is it okay to not have a credit card?
Credit cards aren’t necessary to have and oftentimes you can pay with cash, personal check, a debit card, or some other form of payment. However, we recommend that everyone open at least one credit card.
At the very least, you can establish your credit line and use it sparingly for essential expenses or emergencies. Not to mention, many rental car agencies and hotels may only accept credit cards to pay your deposit. Not having a credit card can be very limiting in certain scenarios.
First, it’s important to know the due dates and interest rates for each credit card. It’s a balancing act of paying down your high-interest cards first and then meeting the minimum payments before each statement due date, but you’ll ideally want to pay all statements in full by the respective closing dates to avoid incurring interest.
Through a strategic approach, opening credit cards (and maintaining perfect credit habits) is one of the easiest ways to increase your credit score. However, note that building up your credit is a lengthy process. It can take a minimum of 30 to 45 days before you see noticeable results.
In most instances, you can only apply for one of the same credit card at a time. However, you can certainly carry multiple credit cards from the same issuer simultaneously, like the Chase Sapphire Preferred® Card and the Chase Freedom Unlimited®.
We recommend that you wait at least six months before your last credit card application. The longer you wait before applying for a new card, the better, as existing cards won’t show up as “new inquiries” on your credit portfolio after two years. New inquiries can ding your score so it’s best not to apply for too many in too short a period of time.
*The information for the Capital One Venture X Rewards Credit Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer.
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