How Many Credit Cards Should I Have?

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In today’s market, there are numerous credit card options that all offer different rewards, benefits and terms. This creates overchoice and unease for consumers who want to find the best credit card for their needs. Choosing the “perfect” credit card that fits your needs is often hard, and there may not be one card that fits all of your needs or wants. That’s where having multiple credit cards can be a good option. Of course having more than one card may lead to issues, so make sure opening more than one card is the best choice for you.

In this post we’ll address the following points concerning multiple credit cards:

  • Reasons it makes sense to carry more than one credit card
  • How many cards is too many?
  • How multiple credit cards can help and hurt your credit
  • Strategies to maximize rewards and benefits with multiple credit cards

Reasons it makes sense to carry more than one credit card

Depending on your financial situation, having multiple credit cards can be a great way to enjoy additional rewards and benefits. Here are some key reasons multiple credit cards can be a good choice for you:

  • Improve your credit score. With multiple cards, you are able to enjoy a larger credit limit that can lower your utilization rate, and as a result may increase your credit score.
  • Maximize rewards. You can earn higher rates with multiple cards. For example, if you have one card that earns 2 percent cash back on all spending, and another that earns 5 percent cash back on grocery purchases, you will be able to maximize your cash back rewards by using the 5 percent card for groceries and the 2 percent card for all else.
  • Enjoy various benefits. With multiple cards, you can increase the benefits you have. One card may provide you with exclusive entertainment access, another may offer hotel room upgrades, and one may offer travel insurance. Keep in mind each benefit is only available on purchases you charge to that card.
  • Transfer an existing balance. If you have an existing balance on your credit card, you can transfer it to a card that offers a 0% intro APR period on balance transfers. This will allow you to avoid interest accruing on your overdue balance during the intro period.
  • Take advantage of sign-up bonuses. Many cards offer great sign-up bonuses that can give you cash back, points or miles. With several cards, you can enjoy multiple bonuses and increase your rewards, as long as you meet the requirements.
  • Have a backup card. If you make a purchase and one of your cards isn’t accepted at the vendor, having an additional card to act as backup can come in handy.

How many cards is too many?

There is no perfect number of credit cards to have, but according to this recent survey by Experian, Americans have an average of three credit cards each. With three credit cards you may be able to manage the different rewards and payments associated with each. Having more than three cards can create confusion if not managed properly.

How multiple credit cards can help and hurt your credit

Although there are benefits associated with having multiple credit cards, there are also some pitfalls. See below for a breakdown of the pros and cons associated with each credit factor and read our guide to learn more about important factors of your credit score.

Utilization rate

This makes up 30 percent of your credit score and is a large factor lenders use when determining your credit risk. Utilization is the percentage of your credit limit you use versus how much available credit you have. A MagnifyMoney study shows that consumers with perfect credit scores have the lowest utilization rate.

  • Pro: Having more credit cards will increase your overall credit limit, giving you an opportunity to lower your utilization rate. A utilization rate of 20 percent or less is ideal, and this may help raise your credit score. For example, if you have two cards with a combined credit limit of $10,000 and you spend $2,000 a month, your utilization will be 20 percent.
  • Con: You can potentially hurt your credit score if you max out multiple credit cards. Spending the majority or all of your credit limit each month will result in a very high utilization rate, and subsequently lower your credit score.

Payment history

This is the largest factor of your credit score — at 35 percent. Depending on if you pay on time or not, your credit score will fluctuate accordingly. This is a very important factor to be aware of when applying for multiple credit cards.

  • Pro: If you are responsible and keep track of when your payments are due, and pay every bill on time and in full, you will build good payment history. A great way to stay on top of payments is to set up auto pay, or set reminders. Most credit cards offer email or text alerts too.
  • Con: If you are not a responsible cardholder and tend to spend more than you can afford, you may run into debt. Not only will you be charged interest, but your credit score may also take a hit.
  • Con: You are more likely to miss a payment with more than one credit card since you have to balance multiple payments.

Length of credit history

Average length of credit history makes up 15 percent of your credit score. For this component of your score, lenders look at the average length of time you have had credit. So if you have one card that is 10 years old and another that is two years old, your average length of credit history will be six years. The higher your average length of credit history, the better your score will be.

  • Con: Opening too many cards too quickly can temporarily bring your credit score down. This is due to the shorter average length of credit history you will have. Also, you will have multiple credit inquiries that take points away from your credit score. Both of these effects are temporary.
  • Con: If you open multiple credit cards and close older cards, you will lower your average length of credit history, therefore lowering your credit score.

What kind of credit score you need to have multiple cards

To have multiple credit cards, you need a good or excellent credit score. The better your score, the more likely you are to be approved by lenders and enjoy the great rewards and benefits the credit cards provide. Deciding to have more than one credit card is only a good option when you are a responsible cardholder and are prepared to manage various due dates and terms.

Strategies to maximize rewards and benefits with multiple credit cards

Having multiple credit cards allows you the ability to maximize your rewards and take advantage of numerous benefits. Below we discuss the best strategies to maximize your rewards by taking advantage of rotating categories, travel rewards, combinations of different card types and balance transfer offers.

Take advantage of rotating categories

To maximize cash back rewards you can have several cards that offer varying cash back rates. You can have a flat-rate card for everyday purchases and then a rotating bonus category card to maximize rewards in the quarterly categories. A great pairing is the flat-rate Citi® Double Cash Card – 18 month BT offer, which offers 1% cash back when you buy and 1% cash back as you pay for those purchases and either the Chase Freedom® or Discover it® Cashback Match™ for rotating 5 percent bonus categories. With Chase Freedom® past bonus categories have included restaurants, grocery stores, gas stations and department stores — Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories every 3 months. Unlimited 1% cash back on all other purchases.. With Discover it® Cashback Match™ you can earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate. 1% cash back on all other purchases.. By pairing two cash back cards and coordinating your spending, you can earn more cash back than if you only had one cash back credit card.

Earn smarter travel rewards

If you’re a frequent traveler, you may benefit from both airline-specific and hotel-specific credit cards. This may allow you to earn high rewards rates on both purchases. For example, if you frequently fly JetBlue, you can have the JetBlue Card and earn high rewards on JetBlue flights — 3X points on JetBlue purchases, 2X at restaurants & grocery stores, 1X on all other purchases. Then, if you stay at Hilton Hotels, the Hilton Honors™ Surpass® Card from American Express has a fantastic rate for Hilton purchases — 12X Hilton Honors Bonus Points for each dollar of eligible purchases charged on your Card directly with a participating hotel or resort within the Hilton Portfolio. 6X Hilton Honors Bonus Points for each dollar of eligible purchases on your Card at U.S. restaurants, U.S. supermarkets, and U.S. gas stations. 3X Hilton Honors Bonus Points for all other eligible purchases on your Card. *Offer is no longer available through our site. By using both cards for purchases in their high-rate categories, you will be able to maximize the travel rewards you earn.

Mix it up

You can have different types of cards and use each according to your spending habits. One strategy is to have a flat-rate cash back card that can earn you a good rate on everyday purchases, then have a specialized card like a travel rewards card or a balance transfer card for other purchases or needs. A great option for a flat-rate cash back card is the Citi® Double Cash Card – 18 month BT offer, which offers 1% cash back when you buy and 1% cash back as you pay for those purchases. This allows you to potentially earn significant cash back. Then, if you are a frequent traveler, you may want to have a travel rewards card that earns a higher rate on travel spending and offers travel perks like priority boarding, a free checked bag, travel insurance and more. Another option to mix up the type of credit cards you have is a balance transfer card that can help you save on interest payments during the 0% intro APR period. While you pay off your balance on a balance transfer card, you can still make purchases on your other card and enjoy the rewards you earn.

Complete a balance transfer

If you have an existing balance on a credit card with a high APR, you can complete a balance transfer and save on interest payments during the 0% intro APR period. Most balance transfer cards offer 0% intro APR terms that typically last upward of nine months. This will provide plenty of time for you to pay off your debt. Most balance transfers charge a balance transfer fee (typically 3 to 5 percent of your transfer), but the amount you save on interest often outweighs the fee. To qualify for a balance transfer card, you need a good or excellent credit score. You also will not be able to transfer a balance between credit cards from the same bank. Keep in mind most balance transfers require you to transfer your balance within a certain time frame from account opening in order to qualify for the 0% intro APR offer.

In addition to rewards sign-up bonuses, you can find credit cards with 0% intro APR bonus offers for balance transfers and/or purchases. These do not require a minimum spend but do have time limits for when you can participate in the offer. For example, the Citi Simplicity® Card - No Late Fees Ever offers 0%* for 21 months on Purchases* and 0%* for 21 months on Balance Transfers*. You must complete your transfer within four months from account opening to take advantage of the 0% intro period; any transfers after four months will not qualify for the 0% intro APR rate.

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