How Many Credit Cards Should You Have

Hey everyone and thank you for coming to read my first post here on Stumble Forward. Today, I’d like to talk a bit about credit cards. These days, credit cards have become the cornerstone of things we have in common as consumers when it comes to finances. The truth is, the vast majority of us who qualify for these special rectangular pieces of plastic have one or two of them at least!

That being said, there are a few questions that have come up as a result of the popularity of credit cards. Questions like, “Is it important to have a credit card and why?”, “How many credit cards should you have?” and “How much credit card debt is OK to have without harming your credit scores?” are often the topic of conversation in my emails and social media. That being said, here are the best answers that I can give when it comes to these questions…

Is It Important To Have A Credit Card? Why Or Why Not?

Having a credit card has become more and more important as lenders and credit reporting agencies fine tune their algorithms that tell them who is most likely to pay back debts. These days, how you handle your revolving credit is a huge factor that comes into play when determining your credit score. Therefore, if you don’t have a credit card that is actively used, you may find it hard to improve your credit score enough to get a good interest rate on important loans like mortgages and auto loans.

Aside from the credit score aspect of having credit cards, it’s also important to remember that these cards have become a primary way to pay in the United States. These safe alternatives to cash are accepted almost anywhere you go and help you to manage your funds. The simple fact is, if you are trying to obtain financial stability having a credit card can really help you.

Finally, there are tons of recreational reasons you might want a credit card. For instance, you will find it hard to reserve a hotel room or rent a car without a credit card. Aside from the benefits they provide to you, they also provide insurance for those who’s services require the use of their property. They are used to gauge the credibility of consumers as well as recover any losses as a result of damage to the property that consumers rent.

How Many Credit Cards Should You Have? 

There are two ways to look at this question and I hope to address them both for anyone who is looking for one or the other. That being said, the first way to address this question is from a credit score perspective.

Like not having a credit card at all, having too many credit cards can have a negative impact on your credit score. I’ve seen this time and time again with consumers who email me something like…”I’m doing everything right, I pay all my credit card bills on time and, that’s a feat with 8 accounts.

Why  is my credit score going down?”. In this case, it is because the consumers have too many credit cards or credit card debts. When looking at it from a credit score standpoint, it is never good to have more than 3 credit cards.

Looking at it from another direction brings a completely different answer. Because thinking of financial stability when making decisions like this often leads to good credit scores, I often tell my clients not to think about their scores but, instead to think about how the decision will benefit their financial stability.

That said, the question, “How many credit cards should you have?” should be rephrased to “How many credit cards are necessary for a financially stable lifestyle?”. That being said, the answer is 2. One credit card that you plan to use on a daily basis and pay off at the end of the month. The second credit card would be the account with the lowest interest rate and would be used as your large purchase or emergency fund. This is the card you will carry a balance on and aggressively work to pay off over time.

How Much Credit Card Debt Is OK To Have Without Harming Your Credit Scores? 

Your credit score is the most important 3 digit number you will ever come across. I say it time and time again. Now, when it comes to credit card debt, it’s important to remember that over-indulgence is never a good thing.

Not only will overuse of credit cards lead to financial hardships or even bankruptcy, as it happens, your credit score will consistently decrease. After all, one of the factors used in the calculation of your credit score is your debt to available credit ratio.

Generally, financially stable consumers that are likely to pay their debts back have a debt to credit ratio below 50%. Once it goes over 50%, consumers have a high likelihood of financial hardship and lenders know that means they will not be paid back in a timely manor. That being said, as long as you keep your balance below 50% of your credit line, you should be fine.


About The Author – Joshua Rodriguez


This article was written by Joshua Rodriguez, proud owner and founder of CNA Finance and avid personal finance journalist. Join the conversation with Joshua on Google+!

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  1. If you are going to have credit cards, i would recommend just having one credit card and paying it off at the end of each month. You can then consolidate your rewards onto one card.

  2. I have 3 cards and W has 2. I would get rid of one of my cards but I got it when I turned 18 and I don’t want to cancel my longest-standing card until after we buy the next house. We don’t ever carry a balance though, I always make sure to pay off whatever we owe every week.

  3. I try to keep my limit to 3. No matter how many credit cards I think I have open, I’m always surprised when I get my credit report and see how many lines of credit I still have open.

  4. I agree FMM. I’ve been considering the idea of going down to one card because it seems like every card you have is just another bill you have to pay. On top of that it would also add to receive more from my rewards card like you said. The only problem is I don’t want to close the card out till my mortgage is closes, this way I can land the best rate possible.

  5. If you have 5 cards and keep them all paid off every month without a problem I wouldn’t worry about closing any out either Michelle. Those older cards could cut down on your credit score a lot so Just hang on to them, it doesn’t mean you have to use them.

  6. Three’s a pretty good number but I prefer to cut down to one which I plan to do here soon. I feel it all comes down to control, if you have problems with loading up your cards the less you’ll want to have, but the better you are with handling them the more cards you may be able to handle. Thanks for the comment MMD, I really appreciate it.

  7. I agree KC I wouldn’t go over 3 either, I think after that point it just becomes to much stuff to manage.

  8. Good point Holly, managing 3 to 4 cards and tracking all the rewards could get a bit confusing. Personally I’d rather have just one rewards card and focus all of my attention there, however in your case since your churning credit cards for the initial rewards that they give out and then dumping them a few months later, having 3 or 4 is not a bad idea.

  9. I agree with you 100% Laurie. I’m working on ditching my credit card debt once and for all right now. In fact I plan to have it all paid off here by the end of June. I’ll be covering more about how I’m doing this in the next coming weeks but for now keep up the great work on paying down those credit cards.

  10. Great post. Really depends on the person. Some people should just avoid them period and have a savings account built up big enough for emergencies. Thats easier said than done. Ive been fortunate enough to not need them “anymore” but now i have more than ive ever had. All with no balance or least very low balances. Whether you get rewards is probably something that should be a part of your decision. With large business expenses its amazing how fast the rewards add up. I’d also suggest rotating cards u use if u only want a balance on one. Some companies have canceled unused cards for no apparent reason which kills credit life. Usually its those with worse credit that they will cancel which sucks because your trying to build your credit without going into deep debt. Could go non and on.

  11. Credit cards are necessary. Yup, I dare say it and we shouldn’t be afraid of them if we know how to control our habit of spending. It’s important for people to understand how credit cards work and how to make it work for them. Like you said, I use one card to make payments for practically everything and in turn I earn points. The amount is paid in full each month and no interest is ever paid. In addition, the points are exchanged for gift cards so basically I am getting paid to use a credit card.

  12. Good points rookie, I prefer to have one just for the rewards but that’s were it mostly ends for me. As far as having a card canceled as long as you can use it a couple a times a year you should be able to avoid having your card cut off. However, I do know some cards will also charge an inactivity fee for not using the card enough which is kind of stupid in my opinion.

  13. Well said Jason, this is exactly how I use my credit cards. I specifically use a gas rewards card because it’s one of the biggest necessities that we can’t forgo without, and with my rewards card it gives me anywhere from 5 to 25 cents off per gallon which is a big help.

  14. @FMF, thanks for your comment. That’s a great way to go for many people! But, when you do that, you want to make sure not to surpass rewards caps, most rewards cards do have them.

  15. Hey Michelle, thanks for commenting! In your case, closing the card you’re thinking about wouldn’t be a good idea. Also, the fact that you have no balance at all means that you probably don’t have more than 1 or 2 accounts active during any given month and, managing your cards that way should be fine.

  16. My Money Design, thanks for your comment! 3 is a good max and, keeping an eye on your credit report can help you decide if you’re getting into the too many credit cards mark if you’re not sure how many you have. But, in most cases, consumers who aren’t sure how many they have often have way too many revolving accounts.

  17. Hey KC, in some ways it does matter. If you have 5 open accounts but only actively use 2, that’s usually OK it’s when you have too many accounts open to manage that people fall into untraceable debt problems.

  18. Holly, rewards are fun aren’t they! I love the tricks you share on Club Thrifty too. I’m glad to see everyone here seems to keep a reasonable amount of cards. Thanks for your comment!

  19. Hey Jason,

    Thanks for your comment. Seems like you’ve got it down and, how dare you speak taboo out it public like that…lol! Thanks again for dropping by!

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