A woman holding several credit cards wondering how many credit cards is too many?

Credit cards are easy to apply for and convenient to use—so convenient that most people now carry three or more cards. But how many credit cards should you have? Let’s take a look at the financial implications of owning multiple cards and consider some tips for managing your cards better.

Credit Check: How Many Cards Should You Have?

Credit cards are a popular choice offering convenient payment of everyday expenses and cheap short-term financing of larger purchases. In fact, cards are so popular that Americans now own an average of 3.84 credit cards each.

Used well, multiple cards can be a smart way to spread your spending and access cheap credit. Having several credit cards can also be a great way to build credit that will allow you to borrow money to afford tuition, a car, or a home in the future.

Used badly, a wallet full of cards is a temptation for overspending and a pathway to long-term debt. Plus, a history of missed payments or high balances will make it harder for you to borrow money later on.

So what is the right number of cards to own to get the maximum benefit for your finances and credit record while avoiding the pitfalls of multiple credit lines, late payment fees, and unsustainable spending?

Unfortunately, there’s no right answer to how many credit cards you should have. What matters is how you manage the cards that you do have. Let’s take a look at the advantages and disadvantages of running multiple credit cards.

Advantages of Multiple Credit Cards

Owning and using several credit cards at once has clear advantages, provided you pay down your balance and always make payments on time. These advantages include:

Increasing Your Available Credit

According to the credit bureau Experian, the second most important factor affecting your overall credit score is your credit utilization ratio, which is the percentage of the credit you have access to that you are actually using at any one time. Adding a new credit card will increase your available credit and lower your credit utilization ratio, provided you don’t overspend.

Maximize Rewards

Being smart about the cards you choose to own can allow you to earn valuable rewards in the form of cash-back payments, points, hotel nights, or airline miles. Matching the type of rewards you can earn to your spending—and making sure you use the right card for each purchase—means you’ll get the most out of the cards you have.

Other Perks

Credit cards come with a wide range of other perks, from extended purchase warranties and travel insurance to special access to exclusive airport lounges, clubs, and subscription services. Many cards also offer enhanced security and anti-fraud protections and services. And, the better your credit score, the better the card benefits you’ll be able to qualify for.

Disadvantages of Multiple Credit Cards

Owning multiple credit cards can come with risks, especially if you don’t understand how the card works, or you aren’t good at tracking and managing your spending. Disadvantages include:

Temptation to Spend

Available credit is just that: more spending power right in your pocket. More cards mean more places to charge. With minimum or interest-only payments due, there’s also a temptation to carry balances from month to month. This can quickly turn into unsustainable high-interest debt.

Organization Is Tough

The more cards you have, the more spending streams there are to manage—and the more payments you need to make. 

Getting the most out of your cards means knowing when to use multiple accounts with different annual percentage rates (APR) and rewards structures. Just remember that excessive credit utilization and missed payments will quickly hit your credit score.

Charges and Fees

In addition to interest payments, card expenses like annual charges, ATM and foreign currency fees, and late charges can also build up. This means your card collection can be costing you more than you realize, wiping out any value you might be hoping to get from rewards systems or perks.

Smart Account Management

It’s not the number of cards you own, but your ability to manage them that counts. Using credit properly is a skill you can practice and master over time, with real benefits for your financial well-being. Here are some tips for getting the most out of your credit cards, no matter how many you have!

Choose Low-APR, Low-Fee Cards

While credit cards come with a myriad of special features and introductory offers, always look for the lowest APR cards you qualify for with a low—or even zero—annual fee. Also, beware of other high fees, such as ATM or cash-back charges and late payment fees.

Pay Off Your Balance

The golden rule of credit card usage is to do everything you can to pay off your entire balance each month. If you can do this, you won’t be charged any interest. You’ll be enjoying free credit and all the other benefits your card offers. Be sure to always make at least the minimum payment on your card. Payments missed by more than 30 days will affect your credit score.

Make Large Purchases Wisely

That said, a credit card is useful for paying off necessities or reimbursable expenses that exceed your monthly budget, provided you have a plan to do so. Strategize to pay off any large purchase within two to three months. If you’re unable to accomplish that, you should consider waiting to make the purchase or using a different type of credit, like a personal loan.

Consolidate Balances on Your Lowest Interest Card

If you carry significant balances on one or more credit cards, take advantage of your options by consolidating them on the card with the lowest APR. Most cards charge a small fee to transfer balances while many cards allow you to transfer money for free during a six-month introductory period.

Do Not Apply for Several Cards at Once

Every card you apply for will result in a hard inquiry on your credit report, leading to a small drop in your credit score. However, this should soon be offset by your higher available credit limit. Applying for several cards at once, however, will result in several hard inquiries on your account which can raise a flag and might result in a more lasting impact on your credit score.

Keep Your Old Accounts Open

While it might be tempting to close accounts you’re no longer using regularly, this will reduce your available credit, which can affect both your credit utilization ratio and your credit limit. Keep the account active with a minimum charge each month—and be sure to pay it off on time.

Match Rewards to Your Spending

Choose cards that offer rewards that match your spending patterns and use them for the right purchase. For instance, some cards will reward spending on travel and accommodations, while others offer cash back on groceries or purchases from particular retailers. It might take a little organization, but using your cards deliberately will ensure you make the most of your rewards.

Be Card Smart With Bowater

While it might be difficult to determine how many credit cards you should have, Bowater Credit Union’s credit cards offer the security and low rates of a major card company with the flexibility and superior local service you expect from a great credit union

Whether you’re looking for a low fixed-rate card to manage day-to-day spending or a premium card with industry-leading rewards, we have a product to meet your needs.

Bowater’s VISA credit cards come with:

  •    Competitive rates
  •    No annual fee
  •    Free introductory balance transfers
  •    VISA Purchase Alerts

Click below to learn more about Bowater’s credit card offerings.