How many credit cards should you have?

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If you already have a few credit cards and want to open another, you might be wondering if there is an ideal number of cards to own.

Although there is no single answer, Experienced found than the average American has four. When well managed, have multiple credit cards can allow savvy cardholders to maximize rewards and other benefits, such as interest-free financing and travel protections.

But you should always take your current credit score and your financial situation into account when deciding how many credit cards to have.

Below, CNBC Select discussed with credit experts on how to decide if opening another credit card is a good idea.

What is the correct number of credit cards?

There might not be a “perfect” number of credit cards, but there are some general guidelines to consider when deciding to open another card.

If you have poor or average credit (scores below 670, according to Experian), you may struggle to be approved for credit cards and have difficulty managing a single card. It may be in your best interest to delay opening a new card until your credit score improves.

On the other hand, if you have good or excellent credit (670 to 850, according to Experian), you have a better chance of qualifying and could potentially be in a good position to open a new card. Good or excellent credit scores indicate that you are on top of responsible credit behavior and that you have managed your accounts well, which puts you in a better position to take another account.

How many credit cards is too much?

If you are a credit card optimizer, you might be wondering if there aren’t too many credit cards.

“For someone who is responsible for the use of their cards and never has a balance, then no, there is not too many cards,” the expert told CNBC Select. credit John Ulzheimer, formerly of FICO and Equifax. On the other hand, “if you use your cards to supplement your income and record balances each month, then one card may be too much.”

As long as you use your credit card wisely and adopt responsible credit behaviors, such as making payments on time and in full, you can open as many credit cards as you want.

Read more: I have 10 credit cards – this is how I manage them and how I decide when to open a new one

Choose the right combination of credit cards

If you decide to open multiple credit cards, it’s a good idea to consider how each card can help you save money on your spending. You can maximize the benefits by selecting a mix of cards that offer a range of benefits, such as bonus cash back on certain purchases, 0% APR introductory cards, travel rewards and more.

“It’s really nice to have multiple cards if they allow you to maximize rewards points,” says Priya Malani, Founder and CEO of Hide wealth.

For example, if you drive often and cook meals, you might want to consider cards that offer increased rewards for gas and groceries. Our best choices are PenFed Platinum Rewards Visa Signature® card, with 5X points on gasoline purchases at the pump, and the American Express Blue Cash Preferred® Card, which offers 6% cash back in US supermarkets up to $ 6,000 per year in purchases (then 1%). These cards can help you maximize rewards so that you can save money in the long run.

How Multiple Credit Cards Affect Your Credit Score

Having more than one credit card has the potential at a time increase and decrease your credit score, but it all depends on how you manage your credit cards. Below, we describe how the main factors in your credit score can be affected by opening another credit card.

Payment history

The most important factor in your credit score is payment history, so it’s essential to always pay on time to avoid late fees and penalties. Having more than one card can make it harder to manage different payment deadlines.

“Call your credit card company and have them reset the billing cycles so they’re the same for all of your cards,” Malani recommends. “It’s easier to remember one day than many, which means you’re less likely to miss a payment. “

Many card issuers also allow you to change your payment due date in the app or online. Another security measure is to set up automatic payment, so you don’t have to juggle multiple due dates.

Amounts owed (aka credit utilization rate)

Another important factor in your credit score is the amount of money you owe on all of your credit cards – also known as the credit utilization rate. Experts recommend keeping the usage rate below 30% per card. To find your credit card usage rate, simply add up your balances on all cards and divide by your total available credit limit.

Ulzheimer explains that having multiple credit cards can help increase your purchasing power and give you a lower balance-to-limit ratio, which improves your credit score. However, “the main disadvantage is that you can get into very high debt if you are not responsible.”

Malani echoes this: “Realize that just because you have a lot of credit at your disposal doesn’t mean you have to use it.”

If you open an additional credit card, you will have access to more credit, which can make it easier for you to maintain a low usage rate compared to a single card. But for some people, having access to more credit can be a tempting excuse to overspend, which could lead to a drop in their credit rating.

Below we give an example of the potential positive effect that having more than one credit card can have on your usage rate: Millie has four credit cards and Carole has one card.

  • Millie’s total credit limit is $ 10,000: $ 4000, $ 3000, $ 2000 and $ 1000 on its 4 cards
  • Carole’s total credit limit is $ 2,000: on one card

If Millie and Carole both spend $ 1,000 each per month, their usage rates would be:

  • Millie: 10% ($ 1,000 / $ 10,000 = 0.1 X 100)
  • Carole: 50% ($ 1,000 / $ 2,000 = 0.5 X 100)

This example shows that it’s easier for Millie to maintain a lower usage rate than Carole’s when she spends the same amount of money on four credit cards. But Millie needs to be careful not to overspend with her higher credit limit.

Average length of credit history

When you open a new credit card, the average length of your credit history decreases. This usually only adds a few points to your score and it bounces back within a few months, but if you open multiple cards in a short period of time, the points can add up.

For example, if you opened your first card in 2004 (15 years ago) and decided to open another today, your average credit history would drop from 15 years to 7.5 years. That’s a pretty big difference and it can lead to a decrease in your credit score.

Number of credit requests

Every time you apply for a credit card – whether you are approved or denied – the credit card issuer pulls your credit report. These inquiries negatively affect your credit score, but your score will rebound over time.

The more credit cards you apply, the more inquiries appear on your credit report. Many card issuers provide prequalification forms that allow you to check your qualifying ratings without harming your credit. But be aware that if you decide to submit a formal request, your credit will be withdrawn.

At the end of the line

Opening multiple credit cards has its pros and cons, but if you are able to responsibly manage multiple credit card accounts, it can be beneficial to have more than one card.

“If you trust yourself to open multiple cards and not max them out, go for it. If you think you’ll be too tempted, avoid opening more than one card,” Malani recommends.

Ultimately, you’ll want to review your finances and spending habits to decide if opening another card is the right choice. If you decide to open a new card, think about our top picks for rewards, cash back, to travel and balance transfer cards.

Don’t miss: I opened my first credit card 5 years ago – here are the top 5 rules I follow to manage my finances responsibly

To find out the rates and fees for the American Express Blue Cash Preferred® card, Click here.

Editorial note: Any opinions, analysis, criticism or recommendations expressed in this article are the sole responsibility of the editorial staff of Select and have not been reviewed, endorsed or otherwise approved by any third party.

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