Should you fill your wallet with credit cards or limit the number you have? It all depends on how you use credit and what makes sense for your financial life. Laura explains how to use credit responsibly and determine what number of credit cards is right for you.

22 minute read

Hey everyone. Well, I’m taking a few days off for the Thanksgiving holiday. I pulled a great show from the archives for you. It’s called how many credit cards should you have for good credit, but it’s almost like a brand new show because it includes a new interview with Julia GL, a senior [email protected] who recently wrote interesting article about how many cards are enough. She even talks about a guy who’s got over 1200 credit cards, and you’re going to hear our conversation at the end of the show with some great tips about how many cards you need and ways to use them wisely for improving your finances instead of hurting them. I hope you enjoy this episode, plus the brand new interview.

Hey everyone. I’m Laura Adams and you’re listening to the money girl podcast. If you’re new here, welcome, I’m really thrilled that you’ve downloaded the show that you’ve found us. If you’ve been listening to the show for decades, maybe you’ve even been with me since 2008. When I started hosting the show, I’m thrilled that you’re here as well. Uh, you probably know I’m a personal finance author spokesperson, consumer advocate, and I would love for you to subscribe if you’re new to the show. So you don’t miss a weekly episode. We publish every Wednesday and I cover wide range of personal and small business topics such as building credit, dealing with debt, investing retirement, real estate taxes, insurance, money management strategies, and lots more. So if you’ve stumbled on this show, because you’re looking for more knowledge or resources, even motivation to manage money better are definitely in the right place.

And you’ll find the notes for this in every show with any links to resources that I mentioned and the full information it’s all in the money girl section [email protected] today’s episode is 660 called how many credit cards should you have for good credit? If you’ve been a short or a long time money girl podcast listener, I definitely don’t have to tell you about the fantastic benefits of having excellent credit. You know, that the higher your credit scores, the more money that you can save on various products and services such as credit cards, lines of credit, car loans, mortgages, and even on insurance in most states. But even if you never borrow money, your credit is so important because it affects other areas of your financial life. For example, having poor credit could cause you to get turned down by a perspective employer or by a landlord.

And it could also increase the security to deposits that you must pay on utilities, such as power, cable and mobile devices. Credit cards are one of the best financial tools available for building or even maintaining excellent credit scores. But you might be wondering exactly how many should I have? Do I need one? Do I need a bunch? What’s the right number. So in this podcast, I’m gonna help you understand how cards boost your credit and the optimal number for improving your finances. It’s a little different for everybody. Uh, and I think a common misconception about credit in general is that if you have no debt, you must have good credit. Well, that’s not true. That is utterly false because having no credit is the same as having bad credit to have good credit, you’ve gotta have credit accounts and you have to use them responsibly.

So before we talk about how many cards you should have, we first need to review some essential tips and strategies for using them the right way. That information will help you understand the optimal number for your situation. So we’re gonna cover five tips for using credit cards to build credit. And then we’ll kind of circle back to this idea about what’s the optimal number. So the, the first tip is you have to make payments on time, even if it’s just the minimum payment, making timely payments on credit cards or any of your credit accounts is the most critical factor for your credit scores. Your payment history carries the most weight because you know, it’s obviously an excellent indicator of your financial responsibility and ability to pay what you owe. Having a credit card allows you to demonstrate your credit worthiness by merely making payments on time.

Even if you can only pay the minimum monthly amount, if the card company receives your payment by the statement due date that builds a history of information on your credit reports. Now I recommend paying more than your card’s minimum. Ideally, you should pay off your entire balance every month. So you don’t accrue interest charges. When you do that, when you pay off the card, you’re using the card for free. And so it doesn’t even matter what the interest rate on the card is because you’re never it. If you pay off your balance in full each month. Now, if you tend to carry a balance from month to month, it’s really wise to use a low interest credit card to reduce that financing charge tip number two, don’t rely on being an authorized user. Many people start using a credit card by becoming an authorized user on someone else’s account, such as a parent’s credit card that allows you to use a card without being legally responsible for the debt.

Some card companies report a card owner’s transactions to an authorized user’s credit report. So that could be an first step for establishing credit. If the owner of the card, the primary card owner makes his or her payments on time, even. So some credit scoring models ignore data that does not belong to a primary card owner. Therefore don’t assume that being an authorized user is a rock solid approach to building credit. I recommend that you get your own credit cards as soon as you earn income and can get approved. Tip number three, never max out cards, a critical factor that your credit scores is how much debt you owe on revolving accounts and revolving accounts or credit cards and lines of credit that will always stay open. The match you owe on those accounts compared to your total available credit limits. This is known as your credit utilization ratio, and it gets calculated per account.

And on all of your accounts on an aggregate of like your portfolio of credit accounts, having a low utilization ratio shows that you use credit responsibly by not maxing out your accounts, a high ratio indicates that you use a lot of credit. And in general creditors, don’t like to see that because that could be a red flag that you’re in danger of missing a payment soon, or maybe that you’re going through some financial hardship. So a good rule of thumb is to improve your credit scores by keeping your utilization ratio below 20%. Now that’s not a hard and fast rule. It’s just kind of a, a guideline, you know, the lower, the better, but you do have to have some amount of utilization. As I mentioned in order for the card to be active and to have positive information. Let me give you an example, uh, to just demonstrate the credit utilization ratio.

Let’s say you’ve got a thousand dollars card balance and you have a $5,000 credit limit on a card. In that situation, you’ve got a 20% credit utilization ratio. So the formula is a thousand dollars balance divided by a $5,000 credit limit that’s 0.2 or 20%. As I mentioned, that’s about as high as I would recommend. Now, if you go over that just a little bit from into time, that’s no big deal, but again, in general, you want to maintain 20% or less. There’s a common misconception that it is okay to max out a credit card. If you pay it off in full each month. Now, while paying off your card in full is very smart. And as I mentioned, that’s the way to avoid interest charges that doesn’t gear guarantee that you’re going to have a low utilization ratio. Why? Well, the date that your credit card account balance gets reported to the nationwide credit agencies typically is not the same as your statement due date.

So if your outstanding balance happens to be high on the date that it gets reported to the credit bureau, you’re of a high utilization ratio that will drag down your credit scores. So again, even if you’re paying off that balance in full, when you go over that 20% ratio, you’re still in danger of looking like you’ve got too much of a ratio. So be mindful, never to exceed that recommended 20% threshold. Even if you plan on paying off the card immediately tip number four, use multiple cards. If you need more available credit to cut your utilization ratio, there’s some easy solutions. One is to apply for an additional credit card. So you spread out charges on multiple cards instead of consistently maxing out one card that reduces your credit utilization and boost your credit. For example, let’s say you’ve got two credit cards and each have a 500 or dollar balance, and each have a $5,000 credit limit.

You now have a 10% credit utilization ratio. The formula is a thousand dollars balance. That’s two cards each with $500. So a thousand dollars balance divided by a $10,000 credit limit because each card gives you 5,000. So a and divided by 10,000 is 0.1 or 10%. That’s half the ratio of my previous example with one card. So again, getting two cards spreading out those balances can cut your utilization ratio in half, and that will definitely improve your credit scores. Another strategy to cut your utilization ratio is to request credit limit increases on one or more of your cards, having the same amount of debt compared to more available credit instantly reduces your utilization and improves your credit. Tip. Number five, keep credit cards, active credit card companies are in business to make a profit, right? So if you don’t use a card for an extended period, they can actually close your account or even cut your credit limit.

You may not mind having a card canceled if you haven’t been using it. But as I just mentioned, your available credit plays a very big role in your utilize ratio. If you have a cut in your credit limit, that actually means bad things are coming for your credit scores, lower credit limits mean that you’re going to look riskier and therefore your scores are going to go down. So no matter if you or a card company cancels, one of your revolving credit accounts causes your total amount of available credit to shrink, which instantly spikes your utilization ratio. And as we’ve said, when your utilization goes up, your credit scores can plummet. Anytime your credit card balance has become a higher percentage of your total credit limits. You appear riskier to creditors, even if you aren’t. So keep your cards open and active, especially if you’re considering a big purchase such as buying a home or a car within the next six months.

In general, I recommend that you charge something small and pay it off in full several times a year. Maybe like once a quarter in order to keep a card active and keep your available credit limit in place. If you have a card that you don’t like, maybe because it charges an annual fee or it’s got a high APR, don’t be afraid to cancel it. You just need to replace it another card, ideally, before you cancel the first one that allows you to swap out one credit limit for another and avoid a significant increase in your credit utilization ratio. So I hope going through these tips helps you understand why maybe having one credit card isn’t enough for you. Now, I will say if you got a bunch and you’re just determined to get rid of them, you know, kind of pair down what’s in your wallet.

I get it a tip to do that wisely would be to space out your cancellations over time. So maybe just cancel one card every six months or even one a year in order to minimize that negative effect to your credit scores. Now that you understand how credit cards help you build credit, let’s consider how many you really need the optimal number for you. Depends on various factors, such as how much you charge each month, whether you use rewards and how responsible you are with credit. According to Experian, which is one of the nationwide credit bureaus, 61% of Americans have at least one credit card. And the average person owns four. Having more open revolving credit accounts makes you more likely to have higher credit scores. If you manage those accounts responsibly, as I mentioned, having more available credit compared to your balances on revolving accounts is a crucial factor in your credit scores.

So if you continually bump up against that 20% utilization ratio that I’ve mentioned many times, you likely need an additional card. Also consider how different credit cards can help you achieve financial goals, such as saving money on every day purchases that you’re already making many retailers, big box stores and brands have cards that reward your loyalty. They’ll give you discounts, promotions, and all kinds of additional services. If you use one of their credit cards, I use multiple credit cards. I don’t even know how many I have right now. I think it’s about 10. And it based on the benefits and rewards that I receive from them. For instance, I only use my Amazon credit card to get 5% cash back on my Amazon purchases. I have a card with no foreign transaction fees that I use when traveling overseas. So obviously I haven’t, haven’t used that one in a while, but I’m hang onto it and make sure that it’s active.

And I’ve got a low interest card, probably a couple low interest cards that I use only if I plan to carry a balance on a large purchase for a short period of time. So think about how different cards can help you achieve different spending goals, the rewards that they have that you’re using and be strategic about having different cards for different purposes. There’s no limit to the number of cards you can or should have. Theoretically, you could have 50 credit cards and have great credit if you manage all of them responsibly. But my recommendation will be to have a minimum of two cards. So you have a backup. If something goes wrong with one of them and have as many cards as you believe will benefit your financial life and are comfortable managing successfully. And here’s my interview with Julia GL and a big thanks to her for coming on the show.

My name is Julia GL and I’m a senior writer at money. I also write the newsletter dollar scholar, which is a personal finance newsletter that kind of takes, uh, young adults through money basics, as we’re all figuring out our finances for the first time,

I noticed that you published an article earlier this month called how many credit cards is too many credit cards. I would love to know why you were interested in writing that article and maybe some of the interesting things you found as you were researching this.

Yeah, absolutely. So I kind of to have an obsessive personality to begin with, uh, when I find something I like, I really like it. And then I kind of go overboard. I, for example, I decided when I was in high school that I kind of like this band, the Jonas brothers, and now 15 years later, I’ve seen them over 30 times. So I, uh, just have that sort of personality. And I was looking for story ideas to cover for, or my newsletter dollar scholar. And I was kind of thinking about whether I had the right amount of cards in my wallet. Um, you know, credit cards are something that I haven’t gone overboard with in the past. And I thought, well, you know, maybe this is something I should do. Um, and so I started looking into it, you know, I only have two credit cards myself.

I have one that is through my bank bank of America that I got as a teenager. And then I have one that I got last year when I started at money and realized that I was maybe kind of behind the curve. And so I started looking into whether I should kind of add to my arsenal, uh, as it were. And I found out I a ton of interesting stuff. Uh, the first thing I found out is that there is slash, was a guy, uh, who had 1,497 valid credit cards at one point in 2005, which absolutely blows my mind. Um, that is too many for sure. I, I feel secure in saying that Laura, so I read an article about it, uh, in ABC news, it says that he made a bet with a friend in the sixties about who could have the most credit cards by the end of the year. And the winner would get a free dinner. So that first year he got about 140 cards and then he just kept going,

Wow, that is amazing. I wonder if he was really using them or, you know, trying to, to get points or rewards on some of them. I know there are a lot of travel hackers out there that will really get pretty serious with their strategy, you know, on getting reward points. Um, but maybe not, maybe it sounds like it was just the, the bet that he was trying to win.

Yeah. I don’t know. I mean, there are obviously a lot of reasons that you should use your credit cards, especially over your debit card, uh, as I’m sure, you know, um, you know, the debit card, your, your liability for fraud is just not as good because it’s covered by a D for an act. Whereas with credit cards, it falls under the fair credit billing act, which really caps your liability. I know that, you know, with credit cards, a lot of times there’s like built in purchase protection. Merchants do not want you to initiate a chargeback. So a lot of times you have a lot of legal room with customer service. And then of course there is, um, you know, the perk, if you can, at that of, if your identity gets stolen, if there’s unauthorized use of your card with your debit card, that money is gone. And as your bank tries to get it back, you don’t have it available to you with a credit card. That’s not the case. All of those were kind of motivations for me to look into how many credit cards I personally should have AKA do I need more than to, in order to be, uh, thriving financially?

Yeah, that’s great. I actually have, I don’t even know how many Julia, I think over 10 right now and just a couple of them, you know, I use on a regular basis, but I have several that maybe I opened in the past because I was a loyal, you know, banana Republic shop or, you know, I was really into a particular retail card at one time. And, you know, maybe I’m not using it so much anymore, but I’ve just kept it, uh, in order to maintain my available credit limits and keep those limits as high as possible. Um, so yeah, I am somebody that would say I’ve, I’ve got probably a lot of credit card compared to a lot of people, but then when I heard about this guy with the 1200 cards, it doesn’t make me feel so bad. I, yeah,

I that’s what I absolutely agree. I don’t, I’m not, not sure he’s stole alive actually, but, uh, maybe check that before you put us on your podcast. Um, but yeah, so maybe not 1500 cards, but maybe not two. So we will, somewhere in the middle is what I found out from my sources. And, and you absolutely hit the nail on the head, right? It comes down to a lot of times your credit utilization ratio, uh, which is the amount of credit that you’re using at any given time in relation to how much available credit you have and that’s calculated across cards. So if you take the credit limit on every one of your cards and you add it up, and then you look at your balance across all your cards and you add it up, ideally you don’t want it over 30%. Some people say you don’t want it over 10%.

Um, and so one way that you would kind of game that ratio is by adding to your credit limit, um, making, you know, that denominator a little bit bigger, um, and you would do that by opening more cards that is not a foolproof method. As you know, uh, when you open a new card or you apply for a new credit card, a lot of times it results in a hard inquiry on your credit report, which can also bring down your credit score. So you gotta kind of keep yourself in check and find a sweet spot

There. Yeah, absolutely. And I do think that, you know, the key is to have enough cards where you’re able to, to really leverage your spending. You know, if you’ve got, uh, let’s say a lot of grocery purchases or gas purchases, mm-hmm, having cards that allow you to make the most of those types of purchases is really smart. And as you mentioned, if you’re maxing that card out, you know, even if you’re paying off your balance in full every month, it still can hurt your credit because you’re getting above that, you know, that utilization ratio that most credit scoring models want to see, which is fairly low. Um, it is, I think, surprising to a lot of P able to hear that it’s actually better to spread out those balances on multiple credit cards than to just consistently max out one credit card or even two credit cards.

So that’s something that I think, you know, really confuses a lot of people. Um, and it certainly, you know, I’m, I’m not encouraging folks to, to go out and open up a bunch of cards and rack up balance is that they can’t pay off. But if you’re using cards responsibly, I think no matter how many you have, as long as you’re using them responsibly, it’s going to, to work out well for your credit. Um, so just something to keep in mind, if you’re paying off those balances in full every month there, you know, there’s really not a downside, right.

You know, there’s not, um, you know, it can be hard, I think just from a logistical standpoint to keep track of all your cards, uh, if you’ve got, you know, 1500 or, you know, 15, so what we don’t want to see, right, is you losing track of those bills and then you’re not paying on time. And then it’s not even about your credit you’ve ratio at that point. It’s your payment history, your on time payments are, you know, you’re failing at that and that’s gonna hit your credit score, but you’re absolutely right about, um, you know, kind of leveraging your cards to get the best, uh, rewards out of them. You know, you mentioned that you kind of like to spread your purchases around, maybe you, some people have a card that’s really good for groceries. Some people have a card that really good for gas in terms of the rewards that you get. I’m actually in a couple of Facebook groups about credit card hacking, which is where people try to maximize those points. And they go so far as to label each of their cards, like with an actual label maker so that when they open their wallet a target, they make sure they’re pulling out the card that is literally labeled, you know, for kitchen supplies. That’s the way that they’re gonna maximize, uh, the points that they get on that purchase. They don’t end up accidentally using the Uber card.

Yeah, that’s great. So yeah, some people kind of take it to, uh, the N degree and, and really want to make credit cards part of their, their money strategy. And, you know, mm-hmm, , I think if you can do that, if you’ve got the time and the inclination to manage cards that way fantastic. You know, and if you don’t, that’s okay too. I think, you know, the key is just having enough cards so that you can make purchases online. You’ve got a backup card, you know, maybe if you travel, you want a card with no foreign transaction fees. Um, you know, just thinking about all the different scenarios where you use cards and just making sure you’ve always got a backup because you might go someplace and all of a sudden you find out, oh, they don’t take American express or, you know, they don’t take discover or something that you had thought that they, it would take.

Um, you wanna be able to have a backup card. And of course we’re all doing more online shopping. So having cards, I mean, if you’re shopping online, as you mentioned, don’t do it with a debit card, the credit card is the way to go. You’re getting protections. Um, not only for fraud, but also for things like extended warranty, you know, and, and if it’s travel related, uh, maybe some kind of travel, uh, insurance as well, if you’re in the habit of using a debit card online, that is just a huge, uh, tip to take away from this show is that you wanna stop using debit cards online. And I would say even really, even in person, if you’re shopping, um, if somebody gets that card, they really have the power to drain your, your bank account. You know, if you don’t catch it quickly. Um, so you do have unlimited liability with debit cards, uh, which is another thing I think people don’t realize, they think, oh, well, it’s my bank.

You know, it’s a bank card they’re gonna protect me. You know, maybe your will give you some protection. Um, but you know, just think about the worst case scenario. Uh, somebody gets that debit card number, spends your entire checking account balance. You don’t catch it, you know, maybe for a while. And by the time you report it, the longer it takes to report it, the less protection that you have basically. So, um, you know, that’s another good kind of reminder that we all need to be watching our transactions, you know, uh, looking at what what’s coming through, that checking account. And if you see anything that you don’t recognize, uh, you’ve got to take action on that immediately.

Oh, for sure. Um, and I mean, you, you mentioned that the fact that, you know, the bank will probably get on, on top of your lost funds. Um, if, if it happens with your debit card, if fraud occurs with your debit card, your bank will probably, uh, intervene. But in the meantime, you just don’t have that cash available. That cash is lost. It’s, it’s your, it’s your cash. It’s not, you know, the credit card issuers cash. And as I understand it, you know, when you make a purchase with the credit card or it’s somebody unauthorized makes a purchase with a credit card, you’re kind of protected in two ways, right? So there’s the legal ramifications that does cap your liability, but then a lot of the major card issuers also on top of those legal, uh, protections have zero liability policies. So you’re really just sitting in a very good spot if you are shopping with a credit card. So it, it makes me nervous sometimes to put things on my credit card, just, you know, I’m a, I’m a child of the recession. I don’t love the idea, uh, of spending money that I’m not positive I have, but it really is the smartest way to go about things, especially from a fraud perspective.

Julia, thank you so much. Uh, these are great tips and reminders and, uh, I really appreciate you coming on the show to chat about card.

Yeah. Thank you so much, Laura,

Where can folks find you?

You can find [email protected] and specifically if you wanna subscribe to dollar scholar my week newsletter that is free and full of money tips and also dog photos, you can go to money.com/subscribe.

Awesome. Thank you so much. Thank you.

That’s all for now. I’ll talk to you next week until then here’s to living a richer life money girl is a quick and dirty tips podcast. It’s audio engineered by Steve Eyberg with editing by Adam Cecil. Our operations and editorial manager is Michelle Marus. Our assistant manager is Emily Miller and our marketing and publicity assistant is Devina Tomlin.

Have you ever wondered, “How many credit cards should I have? Is it wise to have a wallet full of them? Does having multiple credit cards hurt my credit score?”

If you’ve been following this blog or the Money Girl podcast, you know the fantastic benefits of having excellent credit. The higher your credit scores, the more money you save on various products and services such as credit cards, lines of credit, car loans, mortgages, and insurance (in most states).

But even if you never borrow money, your credit affects other areas of your financial life. For instance, having poor credit may cause you to get turned down by a prospective employer or a landlord. It could also increase the security deposits you must pay on utilities such as power, cable, and mobile plans.

Credit cards are one of the best financial tools available to build or maintain excellent credit scores. Today, I’ll help you understand how cards boost your credit and the how many credit cards you should have to improve your finances.

Before we answer the question of how many credit cards you should have in your wallet, it’s important to talk about using them responsibly so you’re increasing instead of tanking your credit score.

5 tips for using credit cards to build credit

  1. Make payments on time (even just the minimum)
  2. Don’t rely on being an authorized user
  3. Never max out cards
  4. Use multiple cards
  5. Keep credit cards active

A common misconception about credit is that if you have no debt you must have good credit. That’s utterly false because having no credit is the same as having bad credit. To have good credit, you must have credit accounts and use them responsibly.

Here are five tips for using credit cards to build and maintain excellent credit scores.

1. Make payments on time (even just the minimum)

Making timely payments on credit accounts is the most critical factor for your credit scores. Your payment history carries the most weight because it’s an excellent indicator of your financial responsibility and ability to pay what you owe.

Having a credit card allows you to demonstrate your creditworthiness by merely making payments on time, even if you can only pay the minimum. If the card company receives your payment by the statement due date, that builds a history of positive data on your credit reports.

2. Don’t rely on being an authorized user

Many people start using a credit card by becoming an authorized user on someone else’s account, such as a parent’s card. That allows you to use a card without being legally responsible for the debt.

Some card companies report a card owner’s transactions to an authorized user’s credit report. That could be an excellent first step for establishing credit … if the card owner makes payments on time. Even so, some credit scoring models ignore data that doesn’t belong to a primary card owner.

Therefore, don’t assume that being an authorized user is a rock-solid approach to building credit. I recommend that you get your own credit cards as soon as you earn income and get approved.

3. Never max out cards

A critical factor that affects your credit scores is how much debt you owe on revolving accounts (such as credit cards and lines of credit) compared to your total available credit limits. It’s known as your credit utilization ratio, which gets calculated per account and on your accounts’ aggregate total.

Having a low utilization ratio shows that you use credit responsibly by not maxing out your account. A high ratio indicates that you use a lot of credit and could even be in danger of missing a payment soon. A good rule of thumb to improve your credit scores is to keep your utilization ratio below 20%.

For example, if you have a $1,000 card balance and a $5,000 credit limit, you have a 20% credit utilization ratio. The formula is $1,000 balance / $5,000 credit limit = 0.2 = 20%.

4. Use multiple cards

If you need more available credit to cut your utilization ratio, there are some easy solutions. One is to apply for an additional credit card, so you spread out charges on multiple cards instead of consistently maxing out one card. That reduces your credit utilization and boosts your credit.

For example, if you have two credit cards with $500 balances and $5,000 credit limits, you have a 10% credit utilization ratio. The formula is $1,000 balance / $10,000 credit limit = 0.1 = 10%. That’s half the ratio of my previous example for one card.

Another strategy to cut your utilization ratio is to request credit limit increases on one or more of your cards. Having the same amount of debt compared to more available credit instantly reduces your utilization and improves your credit.

5. Keep credit cards active

Credit card companies are in business to make a profit. If you don’t use a card for an extended period, they can close your account or cut your credit limit. You may not mind having a card canceled if you haven’t been using it, but as I mentioned, a reduction in your credit limit means danger for your credit scores.

No matter if you or a card company cancels one of your revolving credit accounts, it causes your total amount of available credit to shrink, which spikes your utilization ratio. When your utilization goes up, your credit scores can plummet.

Anytime your credit card balances become a higher percentage of your total credit limits, you appear riskier to creditors, even if you aren’t. So, keep your cards open and active, especially if you’re considering a big purchase, such as a home or car, in the next six months.

If you have a card that you don’t like because it charges an annual fee or a high APR, don’t be afraid to cancel it. Just replace it with another card, ideally before you cancel the first one. That allows you to swap out one credit limit for another and avoid a significant increase in your credit utilization ratio.

If you’re determined to have fewer cards, space out your cancellations over time, such as six months or more.

How many credit cards should you have to build good credit?

Now that you understand how credit cards help you build credit, let’s consider how many you need. The optimal number for you depends on various factions, such as how much you charge each month, whether you use rewards, and how responsible you are with credit.

According to Experian, 61% of Americans have at least one credit card, and the average person owns four. Having more open revolving credit accounts makes you more likely to have higher credit scores, but only when you manage them responsibly.

As I mentioned, having more available credit compared to your balances on revolving accounts is a crucial factor in your credit scores. If you continually bump up against a 20% utilization ratio, you likely need an additional card.

Also, consider how different credit cards can help you achieve financial goals, such as saving money on everyday purchases you’re already making. Many retailers, big box stores, and brands have cards that reward your loyalty with discounts, promotions, and additional services.

I use multiple cards based on their benefits and rewards. For instance, I only use my Amazon card to get 5% cashback on Amazon purchases. I have a card with no foreign transaction fees that I use when traveling overseas. And I have a low-interest card that I only use if I plan to carry a balance on a large purchase for a short period.

There’s no limit to the number of cards you can or should have. Theoretically, you could have 50 credit cards and still have excellent credit if you manage all of them responsibly.

My recommendation is to have a minimum of two cards so you have a backup if something goes wrong with one of them. Beyond that, have as many as you’re comfortable managing and that you believe will benefit your financial life.

This article originally appeared on Quick and Dirty Tips.

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About the Author

Laura Adams, Quick and Dirty Tips

Laura Adams, Quick and Dirty Tips

Laura Adams is an award-winning author of multiple books, including Money Girl’s Smart Moves to Grow Rich. Her newest title, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, is an Amazon No. 1 New Release. Laura’s been the writer and host of the popular Money Girl Podcast, a top weekly audio show in Apple Podcasts, since 2008. She’s a frequent source for the national media and has been featured on most major news outlets including NBC, CBS, ABC FOX, Bloomberg, NPR, The New York Times, The Wall Street Journal, The Washington Post, Money, Time, Kiplinger’s, USA Today, U.S News, Huffington Post, Marketplace, Forbes, Fortune, Consumer Reports, MSN, and many other radio, print, and online publications. Millions of readers and listeners benefit from her practical financial advice. Her mission is to empower consumers to live richer lives through her podcasting, speaking, spokesperson, teaching, and advocacy work. Laura received an MBA from the University of Florida. Visit LauraDAdams.com to learn more and connect with her.

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