Whats the right number of credit cards to have?


As an expert in credit cards and consumer credit, this is one of the questions that I get asked the most. Its partially a technical question about earning the best credit score, its part about maximizing your rewards earning, and its also a question about how best to manage your personal finances. So please indulge me as I offer you all three perspectives, so that you can decide how many credit cards are ideal for you needs.

Wallet with cash and credit cards. (Photo by Getty Images)
(Photo by Getty Images)

The right number of credit cards for building and maintaining excellent credit

Theres a myth out there that having too many credit cards will necessarily hurt your credit. In fact, each credit card you have and manage responsibly will add positive information to your credit histories and can help to improve your credit score. However, this effect is limited and your credit wont continue to rise with each new credit card account you have.

Related reading:Yes, I have 19 credit cards; heres why

To explain this phenomenon in laymens terms, I like to ask the following question: Would you rather loan money to someone who once paid back a loan, or to someone who has consistently paid back many loans? Of course, someone with a larger track record of timely loan repayments will be the preferred borrower. This is analogous to someone with multiple credit card accounts that has a perfect payment record, and very little debt.

The FICO credit score estimator from

But for more concrete proof of the advantage of having multiple, responsibly managed credit card accounts, you can take a look at the free Credit Score Estimator that FICO offers. The first question it asks you is how many credit cards you have. And if you play around with it, youll find that youll receive a higher estimate when you have five or more credit cards than when you select two to four, or one. On average, I found about a 5-point difference between each of these, with five or more being the best and one card being the least.

So if your sole concern is maximize your FICO credit score, then you should have at least five credit cards. However, theres no advantage to your credit score having any more than five cards, and the difference between having two to four or five cards isnt very large.

The authors credit score at the time of writing, and his credit score history from the previous year, as provided by American Express.

I personally have 18 active accounts for which Im the primary account holder, and my FICO 8 credit score at the time of this writing is 846 (based on my Experian credit report). Why do I have so many credit cards? For me, its all about maximizing rewards.

The right number of credit cards for maximizing rewards

Another consideration in choosing the number of credit cards that you should have is maximizing rewards. Here, theres clearly an advantage to having a larger number of reward credit cards, since each can offer rewards earning opportunities not found on other cards. For example, I personally use my American Express Gold Card for my dining and U.S. supermarket purchases, where I earn 4x Membership Rewards points.

I use The Platinum Card from American Expressto pay for airline charges, where it offers 5x points. I also use my Chase Sapphire Reserve for other travel travel purchases where I can earn 3x points, except at Hyatt hotels where I use my Chase The World of Hyatt credit card that gives me 4x points. I also use my World of Hyatt credit card for my gym membership, as it offers double points there. And finally, I use my Chase Freedom Unlimited everywhere else. I also hold cards that I use for my small businesses and for other rewards earning opportunities.

I know people who use even more credit cards collect points and miles from an even greater airline, hotel and credit card reward programs. Some also supplement their rewards with cash back credit cards, as their needs dictate.

So if looked at strictly from the standpoint of maximizing rewards, the right number of credit cards can be a very large number. But the need to maximize rewards shouldnt always be your primary concern.

The right number of credit cards for responsibly managing your personal finances

As much as I love to use credit cards to earn rewards, I always tell people that responsibly managing your personal finances is far more important. As an absolute rule, you should never have more credit cards than you can manage responsibly. This means paying your bills on-time and carrying very little, if any debt. It also means controlling your spending and monitoring your accounts for fraudulent transactions.

If youre unable to manage a single credit card responsibly, then the right number of credit cards for you is zero. Credit cards are very powerful financial instruments, and its better to use another form of payment if youre unable to handle one responsibly for any reason.

Related reading:Ten commandments for travel rewards credit cards

In fact, I tell people that you should never have any more credit cards than you can manage responsibly, which should override any desire to earn rewards or even to maximize your credit score. Because when you miss payments and incur debt, the costs will likely exceed the value of any rewards that you earn. Missing payments and incurring debt will also do far more damage to your credit score than any minor advantage you may gain by having multiple credit cards.

Bottom line

Finding the right number of credit cards for you begins with determining the number of accounts that you can responsibly manage each month, and having not a single credit card more. But if youre able to skillfully manage multiple accounts, then you shouldnt be afraid to add an additional one that offers you a new way to maximize your rewards, as it wont hurt your credit score. By closely examining these three perspectives, youll find the right number of credit cards for your needs.

Featured photo by Orli Friedman / The Points Guy.

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