How Many Credit Cards Should You Have?

Published February 2021

Whether multiple credit cards will help you or land you in debt depends solely on how you manage them. If you have out-of-control credit card debt, having more than one credit card is a bad idea because available credit may be a temptation you cannot resist. On the other hand, if you are never tempted to use your credit card inappropriately, having multiple credit cards can offer some advantages.

How Can Multiple Credit Cards Help You? 

  • Multiple credit cards can raise your available credit limit and thus improve your credit utilization ratio. Since credit utilization accounts for 30 percent of your credit score, a good (around 30 percent) utilization ratio has a significant positive impact. 
  • Some credit cards are free of annual fees. Others earn cash back on various purchases. By skillfully combining credit cards, savvy consumers can save considerable amounts on groceries, gas, travel, etc. 
  • Having multiple credit cards offers you a way out of a squeeze if your credit card company cancels or freezes the card you mostly use. In this instance, maintaining several credit cards is a textbook case of not keeping all your eggs in one basket. 

At first glance, having $2,000 in available credit on a single card and using $1,800 of it while paying it off on time and in full every month makes perfect sense. From the perspective of your credit score, however, it is not an ideal situation. This approach takes your credit utilization ratio to 90 percent, potentially damaging your credit score.

To fix the problem, you need to lower your credit utilization ratio to around 30 percent. In this hypothetical situation, the only way you can do that is by either reducing your credit usage or expanding your credit limit through a new credit card. 

If your monthly budget needs do not justify opening new credit lines, do not get new credit cards. The practice of acquiring new credit for the sole purpose of expanding your available credit limit may hurt your credit score, according to Investopedia

Another reason why having multiple credit cards may make sense is that different credit cards provide different benefits. Some credit cards even have rotating benefits, so it may make sense to use them for gas purchases one month and groceries the next. 

If you want to earn optimal cash back on most of your purchases, you will need a finely tuned selection of credit cards. 

Make sure, however, that your bargain-hunting does not land you in trouble. Only use credit cards that you can pay off in full every month, on time. Keep close tabs on all your cards and make sure you do not lose any of them. 

How Many Credit Cards Should You Have? 

As a rule, do not keep credit cards that you do not plan to use for some purpose. Having credit cards that you cannot afford to pay off does not make financial sense. 

Your spending habits, lifestyle, financial standing, and personal preferences should dictate the ideal number of credit cards you should have. 

  • Having zero credit cards may be an option for some, but if you want to present a diverse credit profile to credit bureaus, you should likely have at least one. 
  • Using a cashback credit card that gives you better deals on essentials such as groceries and gas as your first credit card makes perfect sense. 
  • To expand your credit card portfolio, consider no annual fee credit cards that offer you rewards for the purchases that make up the bulk of your spending. If you are a frequent traveler, you might consider a card that rewards you in miles. Your lifestyle should dictate your credit card choices. 

You do not have to dive into the rewards/savings game if it is too much of a burden for you. Choose a card with decent rewards on your most frequent purchases, with no annual fees, and a reasonable credit line if possible, and stick with it. 

How to Handle Credit Card Debt

The downside of juggling multiple credit cards is that you may lose track of payments or let balances accrue and end up in debt. 

Credit card debt can pile up quickly, and it may spiral out of your control before you know it. It is much easier to become indebted than it is to get out of debt.

Debt relief just ahead road sign.

Fortunately, even if you feel that your debt situation is hopeless, you likely have several options to deal with the situation. Contact a ClearOne Advantage Certified Debt Specialist at 888-481-1597 to learn what your credit card relief options are. 

Some common debt relief options are: 

Debt settlement can save you money while paying off your accounts. It is a debt relief option that shaves amounts off your principal, leaving you with less to pay off. 

To make sure you deal with your credit card debt optimally, get a personalized debt relief plan today.

You can get out of debt. Yes, you. . 

Topics: Credit Card Debt