How Many Credit Cards Should I Have?

If you’re building credit, you probably know that a credit card is a useful tool for boosting your credit score. But what about having multiple credit cards? Is more actually better, or are you simply overcomplicating your finances?

Here, we’ll help you understand the benefits of having multiple credit cards, discuss the risks involved, and explain how you can determine how many credit cards are right for you. Let’s jump right in!

Key Takeaways:

• Having a couple credit cards typically has a positive impact on your credit score.
• The exact number of credit cards you should have depends on your habits and goals.
• Having too many credit cards can expose you to potential financial risk.
• Always consider other types of credit beyond credit cards.

Is it Good to Have Multiple Credit Cards?

Having multiple credit cards is usually good for your credit score. But why is that? Let’s break down some of the benefits and risks of having multiple credit cards to show you why it can boost your credit score.

What are the Benefits of Having Multiple Credit Cards?

Multiple credit cards, multiple benefits. How come? These are some of the main reasons having multiple credit cards can be helpful:

• Multiple credit cards improve your credit mix: The types of credit accounts you have are a significant factor in your credit score. Having multiple credit cards can improve the diversity of your credit mix—a signal that lenders and credit reference agencies will reward.
• Multiple credit cards can decrease your credit utilisation ratio: By opening a new credit card, you’ll be increasing your available credit. If your spending habits don’t change after opening the new card, your credit utilisation ratio will drop. This demonstrates that you’re not dependent on credit.
• Multiple credit cards allow you to maximise your rewards: Opening a new credit card for a specific regular purchase—like groceries—could help you make the most of your money.

What are the Risks of Having Multiple Credit Cards?

Like with many financial decisions, there are no perks without risks. Let’s take a look at what you could be exposed to if you open multiple credit cards:

• Complicated financial organisation: As you open additional credit card accounts, you’ll also have to keep track of multiple payment dates and spending on different accounts. If you don’t stay organised, you could end up missing payment and damaging your credit score.
• A greater temptation to spend: Having more credit available to you can reduce your credit utilisation ratio, but if you're not careful, it can encourage additional spending. Only open an additional credit card if you’re confident in your ability to manage the additional credit.
• Costly fees can add up: Many credit cards, particularly those with the most lucrative rewards, have costly annual fees. When opening additional credit cards, consider looking for cards with no annual fees. If you’re looking for a rewards card, make sure that you’ll use it enough to justify any fees associated with the account. At the same time, don’t increase your spending just to make the fees worth it.

For many people, the benefits of having multiple credit cards easily outweigh the risks. That said, it’s important to consider your own needs, how you’ve managed credit cards in the past, and your goals before deciding whether another credit card is right for you.

Should I Open an Additional Credit Card?

If you’re thinking of opening an additional credit card, it’s best to begin by assessing your current financial situation. Consider things like:

• Am I managing my current credit card(s) appropriately? Consider whether you’ve missed payments, or if you have a system for tracking payments and due dates.
• Am I maintaining an effective credit utilisation ratio? If you’re going above 25% of your credit limit, increasing your available credit could help lower your credit utilisation ratio. That said, you should consider how else you can lower that ratio before opening another card.
• Do I have plenty of credit available right now? If you have plenty of credit available, opening another credit card isn’t necessary. In fact, it could make it harder for you to achieve other financial goals, like qualifying for a mortgage, down the line.

If you still think an additional credit card is a good idea, think about how it could change your financial situation. Consider things like:

• Will I be applying for other types of credit in the near future? If your goal is to quickly build your credit, opening a new credit card could be helpful. However, if you already have several credit cards, it might have the opposite effect. 
• Will I be tempted to spend more? If the increase in available credit could tempt you to spend more than necessary, you’d be wise to stick to your current card(s).
• Why do I want this card? If you don’t have a clear answer to this question—like using it to build credit, earn rewards on regular purchases, or diversify your credit mix—you should spend more time considering what’s right for your situation.

FAQs About How Many Credit Cards You Should Have

When it comes to determining how many credit cards a person should have, there isn’t a lot of clarity. It’s not black and white. To give a bit more context and help you make the best decision possible, let’s dive into some other common questions about having multiple credit cards.

How Many Credit Cards Does the Average Brit Have?

According to a Forbes poll, the vast majority of Brits have at least one credit card, while over a quarter of Brits have 3-4 credit cards. Keep in mind that everyone’s financial circumstances are different. It can make sense for some people to carry multiple credit cards, and it can make just as much sense for others to only carry one or two. Always make your financial decisions based on your needs and goals—not someone else’s.

How Many Credit Cards is Too Many?

There’s no clear answer about how many credit cards are too many, but the benefits of having multiple credit cards diminish as you open more and more accounts. At a certain point, lenders will be concerned by how much available credit you have. This could ultimately lead to them denying your applications for credit in the future.

Ultimately, you shouldn’t try to game the system by opening loads of credit cards. Instead, only open credit cards for specific purposes, like maximising your rewards on regular purchases or diversifying your credit mix.

Should I Apply For Multiple Cards at the Same Time?

You should avoid applying for multiple credit cards at the same time. First, applying for multiple credit cards at once can be an indication that you’re struggling with your finances. This could lead lenders to reject your applications for other types of credit in the future.

Second, each credit card application will result in a hard credit check being pulled, which damages your credit score. While a hard credit check’s damage is usually small and brief, several at the same time can do significant damage. Keep it to one application at a time. 

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Build Your Credit With Pave

If you have multiple credit cards, it’s essential to ensure you don’t miss any payments. Fortunately, Pave can help you with that. Our app connects to your bank accounts and can remind you when you have upcoming payments to help protect your credit score.

Plus, Pave can help improve your credit history, give you personalised credit fixes, and we may even be able to extend you a line of credit. To learn more about Pave and keep your credit score in good standing, download Pave today!