How many credit cards should you have? It’s a common question, but there’s no single right answer for everyone. There are various things to consider about your personal circumstances.
You might be wondering about this if you’re trying to raise your credit score, or if you’re worried about hurting your score by opening new credit cards. So, let’s take a look at some of the important considerations when you’re figuring out how many credit cards you should have.
How Many Credit Cards Do Lenders Like You to Have?
If there were a magic number of credit cards that lenders wanted you to have—or that credit scoring algorithms wanted you to have—it would be a lot easier to answer the question of how many cards you should have. But it’s different for each lender.
Some lenders consider it a red flag if you have 4, 5, or more credit cards open in your name. But then, others consider your credit profile to be undesirably thin if you have fewer than 5 current credit accounts (which may include different types of loans in addition to credit cards).
How Many Credit Cards Should You Have: Important Considerations
Since there’s no one-size-fits-all answer, here are some things to think about when asking how many credit cards you should have:
- Ideally, you should never have more credit cards than you can pay off in full each month.
- If you tend to use credit just because you have it and are at risk of going into credit card debt, the fewer cards the better.
- Also, if you have a hard time keeping track of multiple monthly payments or are otherwise at risk of missing payments—which can be devastating for your credit score and history—it’s wise not to have multiple credit cards.
- Opening (or even applying for) multiple credit cards in a short window is likely to hurt your credit score. Lenders perform a hard inquiry when you apply for a card, and this may reduce your score by about 5 to 10 points, and hard inquiries stay on your credit report for 2 years. Also, new cards lower the average age of your credit accounts, which can hurt your score as well. Keep in mind too that some lenders get nervous when they see someone who’s applied for a lot of credit in a short time.
- It’s best for your credit score if you keep your utilization below 30 percent on all of your credit cards. If you use credit often, it can be easier to maintain this if you can spread your spending out over multiple cards.
- If you use credit responsibly and regularly pay off your cards each month, and you like to take advantage of credit card rewards, then you might want to have a few or more. Responsibly juggling multiple cards with different rewards can be a great strategy. For example, you might have one card that offers 5% cash back on travel purchases, one that offers 5% back on dining, and one that offers 3% back on living expenses like gas and groceries.
Can You Have No Credit Cards?
How many credit cards should you have? How about none?
Some people choose to go without any credit cards. This can be a smart move for those who simply don’t have the discipline not to overextend themselves with available credit. Others just prefer not to purchase anything they can’t buy with cash on hand as a form of budgetary discipline. It is of course perfectly fine not to have any credit cards.
There are, however, a few potential drawbacks to keep in mind:
- Having no credit cards may result in a lack of credit history that lowers your credit score and makes lenders (for personal loans, business loans, mortgages, auto loans, etc.) nervous about extending credit to you.
- Hopefully, you have an emergency savings fund to cover expenses in emergency situations. This is always preferable to using credit to cover urgent unexpected costs. But, a credit card can be a financial lifeline.
- Certain services, such as hotel lodgings and car rentals, are quite difficult to acquire without the use of a credit card.
- You can’t take advantage of cash back and other credit card rewards (although there are some debit cards that offer rewards, though they’re relatively rare, and the rewards tend not to run as high).