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How Many Credit Cards Should You Carry?

Credit Card Basics, Credit Cards
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Choose the Right Number of Credit Cards for Your Lifestyle

Credit cards are a hotly debated topic among personal finance experts. On one end of the spectrum, some advocate being plastic-free, opting to use cash instead. On the other end, some card enthusiasts use multiple credit cards to take advantage of sign-up bonuses and rewards.

Before you decide how many credit cards you should have, consider these pros and cons, and how they affect your credit.

Carrying multiple cards can be a good thing

Having multiple credit cards can help make life easier if you use them responsibly:

Maximize rewards: Credit card companies offer generous rewards on some of their cards to encourage you to apply. For example, one may offer extra cash back on groceries or gas while another may give hotel points or air miles. No one card does it all, so carrying more than one card can help you earn more rewards as you use different cards for different purchases.

Maintain flexibility: Some cards are more widely accepted than others. It’s generally a good idea to have a backup for situations where your primary card isn’t accepted. Additionally, if one of your cards is lost or stolen, it can take several days before you receive a replacement. If payday isn’t until next week and you’re short on cash, having another card on hand can keep you from overdrawing your checking account.

Diversify your credit profile: Carrying a few established cards and using them regularly and responsibly may have a positive impact on your credit score.

» MORE: Why nearly every purchase should be on a credit card

The dangers of having several credit cards

Despite the benefits of carrying a few credit cards, there are some drawbacks you should also consider:

Keep track of spending: The more cards you have, the harder it is to remember how much you’ve spent on which card. If staying organized isn’t your forte or you don’t track your spending with a budget, carrying several cards may not be a good idea.

Due dates: Few credit cards allow you to choose your due date. If you have several due dates and lose track, missing one can result in a late fee and interest. You can avoid this by keeping track of your due dates with an Excel spreadsheet or sign up for email or text reminders. But if you don’t want the extra hassle, fewer cards may be the better choice.

Can damage your credit score: Your FICO score is heavily influenced by the amounts you owe. Specifically, your credit utilization ratio plays a big role in that three-digit number. Your credit utilization ratio is calculated by dividing your card balances by your total available credit. It’s generally recommended that you keep your credit utilization ratio below 30% on each individual card as well as across all cards, so the more high balances you have, the greater the danger to your credit score.

Making the decision

There’s no right or wrong answer when it comes to how many credit cards you should have. It all depends on your preference and financial situation. Is maximizing rewards one of your goals? If so, you’ll benefit from having multiple cards. Do you value simplicity above all else? Then sticking to one card might be the way to go. Perhaps you don’t want to be tempted to overspend, so you want no card or a debit or prepaid card.  You can even get rewards now with a prepaid card.

Regardless of what you choose, your best bet is to make the decision based on your spending habits, organizational tendencies and personal values.

Ben Luthi is a staff writer covering personal finance for NerdWallet. Follow him on Twitter @benluthi and on Google+.


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