If you’re in your 20s, you may be just starting to learn about things like your credit score and how to apply for a credit card. If you’ve yet to borrow money, you may not even have credit. Learn exactly how many credit cards you should have to improve your credit score — and how many are too many.
How Many Credit Cards Should You Have?
There isn’t one single number that everyone should adhere to. Instead, the number of credit cards you should have depends entirely on how you plan to use them.
Those seasoned with managing their finances typically keep three or four credit cards. For each new account you open, you must be sure you have the means to pay any annual fees or balances.
If you’re new to using a credit card, it’s wise to start with just one. After a few years of experience, you can begin to learn how to start taking advantage of offers and lower interest rates. Sticking to only one credit card is also a good idea for those who already have debt, such as student loans, which make up $1.47 trillion of debt in the U.S.
If you feel you can’t manage the number of cards you have, don’t apply for any new ones. In fact, consider getting rid of one or two to ease the burden.
How to Find the Right Card
What is your credit score? If you don’t know, now is a good time to check.
The credit cards you are eligible to use will depend entirely on your credit score. With a range between 300 and 850, a good credit score is considered 700 and above. Follow advice on how to secure your finances and maintain a good credit score.
Once you know which cards you are eligible for, you will have to answer a few questions. Do you plan to pay off your balance monthly? If not, you’ll want to look closely at interest rates. Do you want to avoid cards that have an annual fee? What type of incentives would you benefit from most?
Knowing the answers to these questions will help you choose the right card.
What are the Benefits of Multiple Cards?
Several benefits come along with taking advantage of more than one credit card.
1. Increased Spending Limits
The amount of money you can spend — your spending limit — is based on your debt-to-credit ratio. The more debt you have, the less money available for you to spend. When you open another credit card, you add more to the credit side of your debt-to-credit ration, allowing you to increase your limit and spend more.
2. Better Fraud Protection
Having just one credit card for all purchases leaves you more vulnerable to identity theft, especially if you make a large number of purchases. By using multiple cards, there’s less chance of your card becoming compromised and your sensitive information being stolen.
3. More Incentive Benefits
Credit cards can be convenient, especially when you don’t have cash on hand. But one major reason people use credit cards is for the incentives. Most credit cards have programs that reward consumers for using their cards. This can be in the form of cash back, points towards free gas, miles for travel and more. The more cards you use, the more rewards you earn.
4. Instant Back-Up
It can be embarrassing to reach for your wallet only to realize you forgot to bring cash. Or perhaps your card was mysteriously declined. The benefit of having another card on-hand means peace of mind no matter when you need to make a payment.
Improving Your Credit
When in doubt, always keep your credit cards — and credit card spending — to a manageable limit. You don’t want to overdo it trying to keep up with the neighbors, maxing our your cards and placing yourself in stressful debt.
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