How Many Credit Cards Should I Have?

Despite looming financial uncertainties, a significant number of Americans don’t plan to cut back on their discretionary spending in 2024. According to Northwestern Mutual’s 2024 Planning & Progress Study, 59 percent of U.S. adults intend to maintain or increase their spending on nonessential items like dining out, vacations and entertainment.

Knowing when and how to use credit cards wisely can help you build a good credit score and avoid adding too much credit card debt. Understanding what affects your credit score and finding ways to manage your spending can also have a big impact on your financial health and stability.

Before adding another credit card to your wallet, here are a few questions to ask yourself:

• Do I really need another credit card?
• What are the benefits and drawbacks to obtaining additional credit cards?
• And just how many credit cards should I have, anyway?

Here’s what to consider if you are considering applying for another credit card.

Is it OK to have more than one credit card?

Generally speaking—yes, it’s common to have more than one credit card. On average, people carry three to four active cards for different uses such as travel rewards, cash back or business expenses. Typically, as your financial needs and spending habits evolve, you may find yourself wanting more credit cards.

Having multiple credit cards can be good if you use them responsibly and pay them off each month. In fact, having more than one card can help lower your credit utilization rate, or the percentage of your total available credit you’re using. Keep in mind that the way you manage your credit cards is far more important than the number you possess.

What to look for in a credit card offer

Credit cards are available through most banks, but there are other companies and stores that offer them, too. Different cards come with different terms, rewards and perks. Here are some things you’ll want to consider when deciding whether to enroll:

Annual fees

Annual fees on credit cards are charges that credit card companies apply to your account to keep it open. Not all credit cards have an annual fee, and some credit cards waive annual fees for the first year. Credit cards that have annual fees often have more benefits or rewards to offer.

Credit limit

A credit limit is the maximum amount of credit a lender will extend to you on a credit card or line of credit. Your credit limit is determined by factors such as your income and employment and can affect your credit score and credit access.

APR (annual percentage rate)

APR is the interest rate charged on any balance carried over monthly on your credit card. This rate is calculated as a percentage of your owed balance and may change as your balance changes.

Rewards and perks

Different cards offer different rewards you can earn. One of the most common offers is cash back on a percentage of purchases. Rewards come in many shapes and sizes, and this is where you’ll want to think about what you’ll really spend money on. Many rewards have to do with spending in certain categories or at certain stores, so where you spend your money matters.

Common types of credit cards

Rewards cards

Many rewards cards offer a large sum of bonus points when you open an account. But remember that those sign-up bonuses don’t come automatically—you typically have to spend a certain amount during the first few months to qualify. So, you’ll want to weigh any initial perks against the card’s everyday rewards, as well as the cost of an annual fee if there is one. If you don’t use the card enough, you might not earn the annual fee back or even reach the initial bonus. And if you have a similar rewards card, you might already be getting better perks.

Credit card rewards are typically offered in two primary formats: cash back and points (or miles).

With cash-back offers, you receive a percentage of your spending back in dollars. For example, 3 percent back on purchases would give you three cents back for every dollar you spend.

Points or miles offers allow you to accumulate rewards for specific types of spending, with potentially higher rewards for certain categories—like travel or dining. Some cards offer a consistent rate of rewards on all purchases, while others provide higher rates for spending in specific bonus categories.

0 percent introductory rate cards

If you’re carrying credit card debt, an offer for a card with a 0 percent introductory rate can be a way to help pay off your debt faster. But before you apply, check to see how long the introductory rate will last and if there are any balance transfer fees. Most cards charge a 3 to 5 percent fee, so you’ll want to look for cards with no balance transfer fees (or very low ones). You’ll also want a card on which the introductory rate lasts for at least 12 to 18 months. If the introductory period is too short, you might soon be paying more for your purchases than with your current amount.

Charge cards

Charge cards function like credit cards, yet the key difference is you must pay the full balance every billing cycle. On one hand, it reduces risk to your credit score because your balance doesn’t carry over, and they generally offer higher credit limits; however, these cards may come with significant annual fees. Store credit cards commonly offer charge cards and may offer exclusive rewards and perks for purchases made at their specific retailers.

Balance transfer cards

A balance transfer is when you shift your existing credit card debt to a card with a lower introductory APR and more favorable terms. Typically, balance transfers offer a reduced or 0 percent introductory rate for a fixed period (such as six to 18 months)—though there is often a transfer fee, usually 3 to 5 percent of the transferred amount.

Pros and cons of having multiple credit cards

Deciding to carry multiple credit cards depends on your spending habits and financial goals. Here are some things to think about when considering adding additional cards:

Pros of having multiple credit cards

You can grow your credit

Adding more cards to your wallet can also boost your total available credit, which may lower your credit utilization ratio and positively impact your credit score.

You can build a long credit history

Credit history makes up 15 percent of your credit score. Maintaining older accounts and keeping them for a long time can boost your score, increasing your appeal to potential lenders. So, if you have a long history of on-time payments, canceling old cards may actually hurt you. However, if you have a bunch of older cards and want to cancel one that’s only a year or two old, it shouldn’t affect your credit too much.

You can diversify your rewards

Credit cards offer a range of rewards. For instance, if you have a travel rewards card, you might consider adding a card that offers cash back on groceries or fuel. This way, you can align your spending with your rewards to maximize benefits

Cons of having multiple credit cards

Managing bills and cash flow can get tricky

Juggling several credit cards can complicate tracking your spending, make it easier to miss payments, increase the risk of overspending and make it difficult to maintain a healthy credit utilization rate. Additionally, you’ll want to keep the varying interest rates across your cards in mind, as this can impact your overall credit card debt. Late payments can be reported to the credit bureaus and may negatively impact your credit score.

Fees can add up

Applying for cards during a no-annual-fee intro period can save you money upfront. But after the intro period ends, you could be left managing multiple annual fees that you hadn't planned or budgeted for.

Credit card applications can trigger credit inquiries

Each application for a credit card triggers a hard inquiry that can ding your credit score. Applying for multiple cards at once can look risky to lenders, so it's best to avoid this if you plan to apply for other types of credit in the near future, such as a mortgage or auto loan.

How many credit cards is too many?

There’s no “right” number of credit cards to have, but if you decide to add more to your wallet, be sure to maximize benefits that align with your lifestyle, budget and track spending to pay on time, and practice good credit card habits. Remember, knowing how and when to use your cards is more important than how many you have.

Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP^®, CERTIFIED FINANCIAL PLANNER^®, and CFP^® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.