How Many Credit Cards Should I Have?

There's no magic number of credit cards you should have. Know your spending habits and focus on paying on time.
NerdWalletOct 8, 2021
How Many Credit Cards Should I Have?

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There's no magic number of credit cards to pursue, but some guidelines can help you navigate your way to solid financial ground. The number of cards you have — and their combined credit limits — can affect your credit score, which then impacts your ability to secure important things like car loans and apartment rentals.

How many credit accounts is too many or too few?

Credit scoring formulas don’t punish you for having too many credit accounts, but you can have too few. Credit bureaus suggest that five or more accounts — which can be a mix of cards and loans — is a reasonable number to build toward over time.

Having very few accounts can make it hard for scoring models to render a score for you. Four or fewer accounts is generally considered to be a "thin file." It's harder to score high with a thin file than a fatter one, and lenders also might view thin files as riskier.

And with a thin file your credit actions can have a bigger effect on your score than if you had more accounts. A good example: With few cards, it might not take much spending to use a lot of your overall credit limit. How much of your credit you have in use is called credit utilization, and people with the best scores tend to use less than 10% of their limits. More cards may help you with keeping credit utilization low.

On the other hand, if having lots of cards makes your life complicated and you miss a payment, that can devastate your score. Make sure you're able to stay on top of due dates.

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Ideally, how many credit cards should I have?

Your spending habits and ability to pay all bills on time determine the sweet spot for you as an individual.

Americans on average have three credit cards and 2.3 retail (store) cards, according to a 2021 report by Experian. Most people build their credit portfolio over time as they age and their credit needs expand.

However, it’s important to note: You must be at least 18 years old to apply for a credit card, and it might be difficult to get approved if you're under 21.

As you start out with credit, It’s a good idea to focus on building good financial habits. Having a reliable income is only one piece of the puzzle. Things like good organizational skills, a solid understanding of how to manage money and an ability to meet deadlines are crucial.

Choosing between cards? Rewards and perks might make the difference

If you’re thinking about opening a credit card, it’s smart to think about how and where you spend your money. Many credit cards offer specialized rewards or other benefits that can be added perks to your regular spending. If you like racking up rewards points, you might want to explore the best cards to maximize grocery, travel or gas spending or ones that offer cash back.

If you want to keep things simple, that's fine too. Focus on the credit habits you follow, regardless of the number of cards you carry. Paying on time and not using too much of your credit limits have a powerful effect on credit scores.

Potential issues with having multiple credit cards

There are benefits to having multiple credit cards, but there are also potential challenges to consider, too.

Spacing out credit card applications

Each application for credit causes a "hard inquiry," which can ding your score by a handful of points. The effect is small and fairly short-lived. However, applying for multiple credit cards in a short period of time can be interpreted as a sign of credit risk, and all those hard inquiries add up. Spacing credit applications about six months apart can prevent multiple hard inquiries from affecting your score.

Managing multiple billing cycles

This might seem obvious, but the more credit cards you have, the more due dates and credit limits to keep track of. One solution is automating monthly payments or changing your due dates to the same day or to align with paydays to make sure you remember to pay your balance in full. You can also sign up for a free credit score dashboard with NerdWallet to track your credit utilization, spending and more.

Timing credit applications with big future purchases

If you’re planning to make a big purchase — like a new home — it’s a good idea to time your credit applications to protect your credit score. Applying for a single credit card can ding your credit score but the points will return in about six months. Keep this time frame in mind and hold off on credit card applications.

Potential impact on your credit score

Here are a few things to keep in mind if you're thinking of opening (or closing) a credit card:

Your credit utilization

The portion of your credit limit that you have in use, also called credit utilization ratio, accounts for about one-third of your credit score. In general, keeping your balances well below 30% of your credit limit helps maximize your score and lower is better.

Opening new cards could benefit your credit score by increasing your overall credit limit. That will decrease your credit utilization as long as you don't spend more and send your balances up.

Your payment history

About 35% to 40% of your credit score is determined by your payment history, making it the biggest factor affecting your score. That means paying on time is far more important than how many cards you have.

Your credit age

Creditors like to see a long, stable credit history. It’s not enough to have one really old card, though. Your credit score considers the average age of all of the cards you have.

That doesn't mean you can never close a card. If you have a compelling reason — like high fees or poor service — it may be worth a possible temporary ding to your score. If you have multiple cards with the same issuer, you can also ask to switch your credit card to a no-fee version instead of closing it. This typically lets you keep your credit line, so your overall credit utilization is not affected.