How Many Credit Cards Should You Have?

What is the ideal number of credit cards, is it better to have multiple cards than just one, and what sort of advantages can you expect? In this guide, we’ll discuss the ways that multiple cards can help, discover the ideal number, and discuss the ways that multiple cards can hurt your credit score.

How Many Credit Cards Should You Have?

There are several benefits to owning multiple cards, but only if your financial situation calls for it. Experts often recommend at least two, preferably spanning different networks (Visa, MasterCard, American Express, Discover) and with additional rewards schemes.

This applies just to credit cards and not debit cards. As far as debit cards as concerned, it’s best to only open additional accounts if they’re used to hold savings or as joint accounts.

How Many Credit Cards Does the Average Person Have?

The current world record for the largest number of credit cards is 1,562 and is held by Zheng Xiangchen of Shenzhen, China. These are all valid credit card accounts, although the record doesn’t specify how high his credit card debt is or how much his credit report has suffered over the years.

Zheng Xiangchen is a long way from the average, as you might expect. The average number of cards is somewhere between 2.5 and 3.5, although it depends on who you ask, as there are multiple small-sample surveys and studies all providing different answers. 

The average number of cards also changes from state to state. If we use data from TransUnion as an example, then the lowest average is around 2.5 in Minneapolis, while in New York it’s just over 3.

There isn’t an ideal range (although, ideally, it should be a lot less than Zheng Xiangchen’s 1,562) and it all depends on your circumstances, your credit report, and on several other factors. Credit card companies tend not to concern themselves too much with how many other active credit card accounts you have, as long as you have a respectable payment history and a solid credit score.

Why Does it Matter?

There are many positives and downsides to having more than one credit card. We’ll look at the way these cards can improve your credit score shortly, but that shouldn’t be the only thing impacting your decision. 

Firstly, more cards mean a greater chance of missed payments, penalty fees, and other issues, all of which can greatly impact your credit score and your credit history. Secondly, you will be required to pay an annual fee on every new credit card that you create. This annual fee is anywhere between $0 and $99, with the higher rates charged for better rewards cards and higher limit cards.

More credit card accounts will also give you a greater combined credit limit, which could come in handy during a time of crisis, and it will allow you to quickly build a strong credit history.

What if you Want an Excellent Credit Score?

Applying for multiple cards will not prevent you from obtaining an excellent credit score, proving you clear your credit card balance every month and don’t accumulate large amounts of interest, missed payments, charge-offs, and other derogatory marks.

Pay your obligations on time. Only use the cards when you have the cash to cover them and wait for your activity to be reported to the credit bureaus. After 6 to 12 months you should see a notable improvement in your credit score and can edge closer to that Excellent range.

How Multiple Credit Cards Can Affect Your Credit

There are a few ways that multiple credit cards can help your credit score. However, there are a few negatives as well.

Negative Effects

There are three ways that multiple cards can reduce your credit score:

  1. Hard Credit Inquiries: Every time you apply for a new credit card or loan, a hard inquiry is added to your credit report and this can reduce your score by as many as 5 points. There is such a thing as Rate Shopping, which rolls all inquiries into one if they are for the same type of debt and occur within a fixed period. However, this doesn’t apply to credit cards.
  2. New Account: 10% of your credit score looks at new accounts. The more of these you have, the more of an impact this aspect of your score will suffer. It’s temporary and its effects are minimal, but it’s worth noting, nonetheless.
  3. Age of Accounts: 15% of your score looks at the combined age of your accounts. Every time you open a new account, you bring down the average age and that impacts this aspect of your credit score.

The good news is that all of this is temporary. If it wasn’t, the world record holder wouldn’t have been able to create over 1,500 new accounts!

Positive Effects

For all the negative ways that multiple credit cards can impact your credit score, there are just as many positives, if not more so:

  • Credit Utilization Ratio: Your utilization ratio compares your total credit to your total debt. The more of the former you have, the higher your utilization ratio will be and the faster your credit score will climb. More accounts mean a higher overall credit limit and providing that credit limit isn’t used, your score will improve.
  • Credit Variety: If you add credit card balances on top of personal loans, car loans, home loans and other forms of debt, you will improve your debt variety, which accounts for 10% of your total score.
  • Payment History: Your payment history won’t improve simply by adding another credit card, at least not straight away. However, another account means another tradeline, and if you meet the monthly payment on that account then your credit score will improve faster.

Tips for Managing Balances on Multiple Credit Cards

If you’re signing up for multiple cards to benefit from more rewards, cash back, and other benefits, then keep the credit limits to affordable amounts, never spend more than you can afford to repay, and keep a close eye on your interest payments if the balance ticks over.

If you already have multiple credit cards and have accumulated sizeable balances, a balance transfer card can help you. A balance transfer will allow you to move one or more credit card balances onto a single balance transfer card. 

These cards have 0% introductory rate spanning between 6 and 18 months. You will be required to pay a balance transfer fee, but the amount of money you save on interest in that time will be more than worth it.

Take a look at our guide to Credit Card Debt Consolidation to learn more.