If you’re like most people, you regularly receive credit card offers in the mail or see advertisements for the best credit cards online. Some of these offers may seem pretty good, especially when they include a signup bonus, rewards program, or introductory APR on purchases and/or balance transfers.
Because there are so many options available, it can be hard to know how many credit cards you should have. Ultimately, there’s no hard and fast rule — instead, the best way to decide is by using marginal decision-making, which means comparing the benefits of each potential credit card against the costs.
If you’re not sure how many credit cards you should have, this guide can help.
On this page:
- Deciding if You Have Too Many Credit Cards
- Deciding Whether You Need Another Credit Card
- The Benefits of Opening Another Credit Card
- The Risks of Opening Another Credit Card
- Building Responsible Credit Card Habits
Deciding if You Have Too Many Credit Cards
Having more than one credit card isn’t necessarily a bad thing if you aren’t getting into trouble with debt. If you simply have lots of cards already open but aren’t paying lots of fees, maxing out your credit limits, or missing payments, then there’s little reason to close any of your existing accounts — but there are lots of reasons not to close them.
Closed accounts can hurt your credit score by lowering the average age of your accounts, a factor that accounts for 15 percent of your FICO score. It could also affect what’s called your credit utilization ratio, which makes up 30 percent of your score. Your credit utilization ratio divides the amount of credit you’re using by your total credit limit. Generally, a good credit utilization ratio should be below 30 percent.
The only reasons to close existing credit cards would be if you’re having trouble keeping track of them all and are therefore missing payments; if you’re paying annual fees for one or more cards that outweigh their rewards; or if you find having too much credit makes it difficult to manage your credit card spending.
Otherwise, you should keep the cards you have and even use old ones occasionally, so they don’t go dormant and end up getting closed by the credit card issuer.
Deciding Whether You Need Another Credit Card
Deciding whether you should apply for a new credit card is more difficult than deciding whether to keep existing credit card accounts open. Opening a new card shortens the average length of your credit history and results in a new hard credit inquiry that stays on your credit report for two full years. Both factors can hurt your credit score.
You’ll need to use marginal decision-making to compare the overall costs of opening another credit to the benefits you might enjoy. If the benefits outweigh the costs, then it probably makes sense for you to open another credit card — regardless of how many cards you currently have open.
But if the benefits don’t outweigh the downsides, it’s probably not a good idea to get a new card, especially if you already have at least one credit card you can use to build credit by demonstrating responsible use.
Some questions you should ask yourself when deciding if you should apply for a new credit card include:
- Why am I interested in this credit card? If you have a strong reason for wanting to get the card — such as a 0% introductory purchase APR that will allow you to pay for a large purchase you couldn’t otherwise afford without incurring interest charges — this is a major benefit.
- Will this credit card help me save money? Some cards offer an introductory 0% APR on balance transfers, which can help you save a significant sum of money if you have existing high-interest credit card debt. Others have great rewards programs that can help you save money on travel or attractive signup bonuses worth hundreds of dollars in cash back.
- Will I be taking out any big loans soon? If you’re going to apply for a mortgage or auto loan soon, you may want to wait before opening any new credit cards so you can avoid incurring new inquiries on your credit report.
- How many inquiries do I already have on my credit report? If you already have several recent inquiries on your credit report, opening another new card could be more damaging to your score than if you hadn’t applied for a new card in the last couple of years.
- How old is my average account history? If most of your accounts have been open for a decade or more and you have a long credit history, opening one new account may not be as damaging to your credit score because the average age of your accounts won’t take as much of a hit.
- How many credit cards and how much available credit do I already have? If you have a lot of credit card accounts open alongside a significant amount of available credit, opening a new credit card won’t help you much because you’ll already have a good credit utilization ratio. If you don’t have a credit card, opening one is a good way to start building a credit history by making on-time payments and keeping your credit utilization ratio below 30 percent.
- What rewards or perks will I get for opening this account? Many rewards cards offer miles towards a free airline ticket or a cash bonus just for opening the card. Good cards also come with perks such as access to airline lounges, travel insurance, and identity theft services. If you can score a generous signup bonus or earn lots of rewards you’ll actually use, this is a big advantage to opening the card.
- Can I manage another credit card? You don’t want to have so many cards that you can’t remember to use the rewards you earn or find it difficult to keep track of payment due dates.
- Will I end up in debt? If opening a new credit card increases the likelihood you’ll end up spending more than you can afford, it’s probably not in your best interests. Credit card interest can be very expensive, and once you’ve charged up a balance you can’t pay in full before incurring interest charges, getting out of debt becomes much harder.
By asking yourself each of these questions any time you consider opening a new credit card, you can make an informed decision about whether the pros outweigh the cons.
The Benefits of Opening Another Credit Card
Opening another credit card can come with certain advantages, including:
- Accessing the card’s new accountholder bonus, as well as other perks and rewards (including introductory APR offers)
- Adding a new type of credit account to your credit report (this is a big benefit if you don’t already have a credit card)
- Increasing your available credit, which can help improve your credit utilization ratio
- Developing a positive payment history as you make on-time payments
The Risks of Opening Another Credit Card
Some of the risks of opening another credit card include:
- Reducing your credit score by lowering the average age of your accounts and getting an inquiry on your credit report
- Ending up with too many cards to keep track of and missing payments
- Finding yourself in debt because you use too much of your credit line and can’t pay back what you borrowed
Building Responsible Credit Card Habits
As you can see, there’s no one right answer regarding how many credit cards you should have. The key is to build responsible credit card habits, regardless of the number of cards in your wallet. This means:
- Paying your credit card bills on time every month
- Keeping your credit utilization ratio below 30 percent
- Not applying for too many new credit cards at once
- Not closing old credit card accounts unless there’s a good reason to do so
- Choosing the right credit card that provides generous rewards, signup offers, or introductory 0% APRs on purchases and/or balance transfers
If you do these things, it shouldn’t matter whether you have one credit card or 10.
Bottom Line
The number of credit cards you have isn’t as important as weighing the pros and cons of each card you’re considering. If you carefully assess the potential benefits and compare them to the costs of a new credit card, you should end up with the right number of cards for you.