How many credit cards should I have?

How many credit cards do I really need?

Chances are, if you have normal spending habits, you do not need more than four credit cards. Less than four might lead you to miss out on extensive rewards programs and spending at places that do not accept your card network. 

How many credit cards does an average person own?

According to a 2019 study by ElitePersonalFinance, an average American holds four different credit cards. Increased consumer spending in the US over the last few decades has prompted an increase in the number of credit cards held by people. However, the number of credit cards you get can vary depending on a multitude of lifestyle factors. 

What are some factors I should consider when getting a new credit card?

Firstly, understanding your credit utilization is critical. You must remember that extensive credit balances can negatively affect your credit score, and increasing spending through a new card can take a bad toll on your score. If you can keep your balances low while increasing the number of credit cards you hold, any impact on your credit score will be minimized. Secondly, you must consider the networks you have access to. In an increasingly competitive market, several retailers are signing exclusive contracts with credit card networks. For instance, Costco only accepts Visa. This means that if you do not possess a Visa card, you lose out a potential avenue for spending. Four credit cards across the main networks (Visa, Mastercard, American Express and Discover) can give you spending access to almost any merchant. 

Once you have considered these two factors, you should think about your credit situation. If you have bad credit, you might want to hold off on another card (credit checks required for card approval can actually damage your score) or spend some money on a secured credit card so you can rebuild your score. If you are suffering from high interest rates on your balances in other credit card accounts, it might be in your benefit to get a balance-transfer card to assist you in paying off your debt. If your score is exceptional, you should consider a rewards-program that you could benefit from and do not already have. Multiple cards with similar rewards structures can dilute your ability to redeem points and lower the overall benefit of using a credit card. 

However, if your credit score is high, feel free to explore different rewards structures and programs. For instance, you could have one card that helps you accumulate airline miles, one that gives you cashback on purchases, one that gives you attractive discounts at your favorite grocery store and one that helps you finance your new car via an attractive APR. One of the greatest benefits of modern cards is that most are digital wallet-enabled, which means you do not have to carry physical cards around. 

In the end, if you are responsible with credit management and want to use credit cards to your advantage, feel free to get as many cards as you want. Our suggestion is that if you want to diversify your spending outlets while maintaining a manageable pool of cards, four is your best bet.