How many credit cards should you have?

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Almost 170 million Americans have at least one credit card.

But how many cards should you have?

Credit cards can help you build credit and earn rewards, if handled properly. But how you use one or more credit cards is more important than their number.

First of all, using credit cards to make purchases you can’t afford will hurt you in the long run no matter how many cards you have. The average credit card has an annual percentage rate (APR) of around 16%. This means that a $ 1,000 purchase could end up costing you over $ 2,000 if you only paid the minimum amount owed each month.

However, responsible credit card use can be a great way to build your credit history. When you pay your credit card bill on time each month, it’s a positive rating on your credit report, which increases your credit score. Plus, if you fully repay your card, you’ll never pay interest. Many cards also offer rewards that can offer you inordinate value, as long as you don’t carry balances from month to month because you would be paying interest which could void those benefits.

Now that we’ve covered the basics, let’s dive in and find out how many credit cards you really should have, and if there are too many cards.

Does the number of credit cards affect my credit rating?

Let’s start with a few basics: Your credit score is made up of several different factors. This includes payment history (35%), amount of debt you owe against the credit you have (30%), length of credit history (15%), new credit (10 %) and the composition of the credit (10%). The number of cards you have does not go into the formula at all.

It should be noted, however, that your credit score takes a small 2 to 5 point bump every time you apply for a new card. It’s a relatively low hit, however, and it’s usually worth it if you get a credit card that meets your financial needs. It also clears up quickly, provided you don’t use that new card to accumulate more debt.

How many credit cards should you have?

The truth is, there is no hard and fast rule as to how many credit cards you should have. It all comes down to practicing financial responsibility: paying your bills on time, and in full when possible, and using the benefits of your credit cards wisely.

Having at least one credit card can help boost your credit, which can then be used for things like approving a mortgage or car loan. Some cards also earn cash back or travel rewards. If you trust yourself to manage a budget, you will benefit more from a credit card than using cash or a debit card.

Conversely, if you aren’t able to maintain the financial discipline required by credit management, a credit card probably won’t be for you – and we recommend using a debit (or cash) card and define a budget before requesting it.

Before applying for a credit card, especially one that offers rewards, it helps to have an idea of ​​what you want to do with the credit or with the rewards.

“Use it for cash rewards, for the travel perks that come with some of the credit cards, just make sure you have a goal in mind,” says Marc Russell, founder of the Betterwallet personal finance Instagram account.

How many credit cards is too much?

If you’re having trouble keeping up with your credit cards or paying your bills, or if you can’t use some of the card’s perks, this is a good sign that you may have too much on your plate – that it is one or ten.

There really is no upper limit if you pay the cards’ bills in full each month and get enough value from their benefits, especially for cards that have annual fees. These perks can range from airfare credits to lounge access and more – all useful tools to have on hand when travel bounces back. (Many travel-focused cards now offer rewards that have nothing to do with travel, because their issuers recognize that people stay at home.)

You also don’t have to keep a card whose reward structure no longer works for you, although we generally recommend downgrading expensive cards that you no longer need rather than canceling them, which can hurt. to your credit score.

Pro tip

Closing a credit card can hurt your credit score. Instead, if you have a card that you no longer want or need, just stop using it. Leave it open and make a small purchase with it every few months.

Final result

There is no definitive number of credit cards that a typical person should have.

Having a credit card (or cards) is all about managing them – and in turn, your finances – responsibly. It matters a lot more than the number of cards you hold.

“Personal finances are personal before they are financial, so you need to look at yourself and your situation to determine the best way forward,” says Talaat McNeely, co-founder of His and Her Money. “If you know you don’t have the discipline to pay off your credit cards, you can find yourself in deep trouble.

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