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Last updated on 31st of August 2021

How Many Credit Cards Should I Have?

Many people ask, "how many credit cards should I have?" when working out their finances. Having cards as a security blanket if you don't have enough cash to pay for an emergency purchase is something we've all had to rely on from time to time.
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Many people ask, "how many credit cards should I have?" when working out their finances. After all, having cards in your wallet as a security blanket if you don't have enough cash to pay for an emergency purchase is something we've all had to rely on from time to time.

There is a persistent idea that having many credit cards can damage your credit score, and indeed, this is true if those credit cards aren't handled responsibly. However, simply having multiple credit cards in your purse or wallet isn't going to automatically affect your credit score in a negative way. In fact, it could even benefit your finances so long as they're managed responsibly. The key is understanding how credit cards work and knowing how many credit cards are too many for you.

The simple fact is that there isn't one answer to the question, "how many credit cards is right for me?" Rather, the answer depends on your individual financial needs and wants and your ability to manage repayments, keep track of your balances and spend wisely.

So, what should you bear in mind when weighing up whether you have the right number of cards for you or whether you need to add another one to your collection?

Are multiple credit cards the norm?

On average, most people have between 3 and 4 credit cards each. But that doesn't mean that one credit card isn't the right number for your needs. In fact, you need to weigh up the pros and cons of utilising more than one credit card before you decide to apply for another one, and you need to know how having multiple credit cards could affect your credit score and financial situation for the better or worse in the long-run.

What are the advantages of having more than one credit card?

Using several credit cards can be very beneficial as long as you know how to utilise them wisely.

Some advantages include:

Increasing the amount of credit you have available to you. 

One of the most important factors in working out your credit score is the percentage of your available credit (or credit utilization) that you're currently using on your credit cards. This means that the further you are away from spending up to your total credit limit, the lower your utilisation ratio. If you have a lower credit utilization ratio, your credit score will be higher. Every time you take out a new credit card, you increase the amount of available credit you have, and this, in turn, drives down your credit utilization ratio. The key to using this to your advantage, though, is to avoid increasing your spending so that you can continue to keep your credit usage low.


Getting more rewards. 

If you take out another credit card that offers rewards and benefits, you can use this to your advantage. Today, many credit cards offer cash back every month when you spend on purchases or come with perks such as free car insurance on rentals, points that can be exchanged for gifts, money off home insurance or vouchers for stores. People who are rewards card enthusiasts can compare credit cards to ensure they're getting the best offers. It's a good idea to take out a new credit card that offers rewards if it allows you to get something different than your other rewards cards will provide you with. For example, two credit cards could offer entirely different benefits - one may give you cash back on purchases, while the other could give you points on your spending that you could then trade in for rewards. Also, the cards may offer rewards on different types of spending. For example, one card could reward you for spending on petrol or groceries every month, while one may give you extra points for spending on dining, travel or travel insurance. In such cases, it's a good idea to have many cards that allow you to maximise the variety of rewards that you can get.


Benefiting from card issuer perks.

For example, often, a card issuer will have an introductory interest free offer for new card holders who want to carry out a balance transfer or make a significant purchase. If you take advantage of an interest free balance transfer, it allows you to move a high balance from a different credit card with higher interest rates and thus save money on your repayments. This means that balance transfer cards offer value when added

Which problems can arise if I have too many cards?

As we've already seen, there are some benefits to having multiple cards, but it's important to be aware that having lots of credit cards available can also cause some issues if you don't manage them wisely. Some potential problems that may arise include:

You end up overspending. 

Unfortunately, if you're given access to more credit, there's a chance you could increase the balances on your credit cards to an insurmountable level where you can no longer make your repayments every month. Increasing your credit limit across several credit cards can be problematic for anyone who has struggled with debt, overspending and making payments in the past. If you're at risk of falling back into bad spending habits due to being given a high credit limit, it's best to minimise the number of credit cards you take out. You may be better off sticking to just one card or even not having a credit card at all. One way of limiting the amount you spend on your cards is to treat them the same way as debit cards - spend only as much as you can manage to pay off each month, keeping them for expenditure over a short period only. You should also ensure that you're creating and following a strict budget so you don't overspend on items you don't really need. Whenever possible, it's best to keep your card balance at zero at the end of each payment period by paying off the entire bill each month. This way you can avoid incurring any interest charges.


It can be hard to stay organised. 

If you have a lot of credit cards, it isn't easy to stay on top of all the balances and payment due dates. Accidentally missing a credit card payment can cause you a host of issues. Not only will you be charged late fees, but you may also end up with a penalty annual percentage rate (APR) being applied to your card, which will increase the cost of your debt.  If you end up paying the bill very late - 30 days late or more - your credit score will probably be damaged. This will make it harder for you to get more credit and reduce the number of credit cards, loans and other lines of credit available to you. This also potentially lowers the credit limits that you're offered, ensuring you're only offered unattractive interest rates on your future borrowing. The good news is that your card issuer may permit you to change the payments due date on your card, so it's possible to keep all of your cards on or around the same date each month. Paying automatically via direct debit will make sure you avoid any late payments and the associated fees. But ensure there's always enough money in your accounts so you can avoid going overdrawn or having your payments returned.


It may end up being expensive to have more than one card.


While trying to find the best credit card for you, it's important to check whether it has an annual fee and, if so, whether it's really worth your while making an application. You need to ensure whether you'll get sufficient benefit from each credit card you have to make up for that annual fee. That's whether those benefits come in the form of regular cash back, the money you'll save on interest with a balance transfer, or valuable rewards points that you can use to save money in other areas of your life. If the benefits don't add up to the amount of the annual fees or exceed them, don't take out the card.


Could having multiple credit cards negatively affect my credit score?

Every time you make an application for a new credit card, a hard search is carried out on your credit history by prospective lenders, and every fresh inquiry takes points from your rating. Making multiple card applications during a short period of time will do even more damage. It will also raise a red flag on any future applications for credit.

Although having many cards will decrease your credit usage ratio, which will improve your credit scores, this will only work if you avoid spending more money on those cards. If you obtain a new credit card and then spend to the max, this will almost certainly harm your credit score, not help it.

When it comes to your credit history, one of the most important factors considered by lenders is your payment history. Even if you have several cards, as long as you're paying them all on time, that could be a plus point in your favour and can increase your score. Conversely, though, if you're struggling to stay organised and end up missing payments by 30 days or more on your cards, this can cause your credit score to take a hit.

When you're thinking of taking out another credit card, you should almost certainly keep old credit card accounts open. This is because if you close an old credit card, your credit score can drop. This is because it reduces the total amount of credit available to you, and thus, your usage ratio will go up. Rather than deciding to cancel and close down those cards, consider instead removing them from your wallet and keeping them in a safe place.

Keeping accounts active helps prevent card issuers from either closing them down or reducing the amount of credit offered to you on them. But that doesn't mean you should use them to get into more debt. One of the best ideas to keep your credit card active is to put one small recurring charge onto it then pay the bill off in full each month.

How do I choose the best type of credit card for me?

If you've decided you want to take out another credit card, how do you find the best one for you?

Essentially, there's no such thing as just one best credit card for everyone, so you need to know what you're looking for and what you can manage before you apply.

Here are a few things to consider to help you make a good choice:

  1. Your credit score. Reward cards usually require you to have an excellent, or at least a good credit rating, so if you're thinking of applying, make sure you've checked your credit score first to ensure you qualify. You don't want to be rejected as this will impact your credit score negatively.

  2. How you use your money. If you're looking for cards that offer rewards, you need to consider where you typically spend money. This will help you maximise what you get out of the offer.

  3. Your preferences. When choosing between different cards, you should consider what you prefer from the reward you can receive. Will a simple cash back card suit you best? Could you save more money with balance transfer cards? What about a card that offers you free insurance - would this be most valuable to you? Consider too, your preference when it comes to having to pay an annual fee. All of these things need to be weighed up before making a final decision.


The bottom line

Having a number of different credit cards can be beneficial, but that only works if you use them properly and don't get into too much debt. To ensure that having numerous card accounts works for you and not against you, you need to be up to date with each card's advantages, credit limits and payment due dates. As long as you strive to keep your balances down and pay each balance in full by its due date as often as possible, you could find that having several cards works well in your favour.