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How many credit cards should you have?

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    There are many reasons to have more than one credit card. Multiple cards offer more ways to pay and different types of rewards, from miles and points to cash back. Credit cards can also help your credit score — or hurt it. So, what is the right number of credit cards? The answer depends on your financial situation and ability to manage your credit.

    Understanding credit cards:

    • Why more is sometimes better
    • The ideal number of credit cards
    • How multiple credit cards can affect your credit score 
    • So, how many credit cards should you have?

    Why more is sometimes better

    There are plenty of benefits to having multiple credit cards:

    • More credit for discretionary spending
    • Convenience in case a merchant only accepts one kind of card
    • Security in case another card is compromised, lost or stolen
    • Different rewards, such as miles on one card and points on another
    • Help build credit score over time

    The danger of multiple credit cards

    Having more than one credit card can turn into a liability if you don't have your spending under control. More credit and increased convenience can lead to missed payments, rising debt and potentially result in a lower credit score. You'll also look risky to lenders if you apply for many cards over a short period of time.

    The ideal number of credit cards

    There is no “perfect" number of credit cards a person should have. What's manageable for one consumer may be overwhelming to another. For example, if you're starting out or recovering from bad credit (or bankruptcy), having one credit card may be sufficient. It shows lenders that you're establishing a record of managing revolving debt. Consider starting with one and as you continue to develop good financial habits you can begin to evaluate if opening a second one makes sense in your situation.

    Experts broadly recommend having at least two credit cards across different networks. Having both a Visa® and Mastercard® comes in handy if a merchant doesn't take one of your cards. You may want to look for cards that offer different rewards, such as cash back and miles to take advantage of different perks.

    How multiple credit cards can affect your credit score

    When it comes to your credit score, the number of credit cards you have is less important than how you manage them. The two major models of credit scores are VantageScore® and FICO®.

    VantageScore® metrics

    Check out the five inputs VantageScore® uses to help calculate your credit score and see how having multiple cards can affect it:

    Credit usage: This is the percentage of available credit you've used vs. the amount given by a lender — also known as your credit utilization ratio. Adding a new credit card can help your score by increasing your unused credit. Be sure to keep your balance below 30 percent of the total credit you have available.

    Credit mix and experience: Having multiple cards can help improve your score over time. Open cards, even inactive ones, can help your credit utilization ratio. Along the same lines, closing old credit cards may hurt your credit score.

    Payment history: This is your history of making on-time payments, and whether you have a history of bankruptcy or accounts in collection. Multiple credit cards can improve your payment history over time. Be sure you can afford and manage payments before opening multiple cards.

    Age of credit history: This is the length of time your credit accounts have been open — the longer, the better.

    This also includes the assortment of accounts and loans you have — or your credit mix. One credit card can improve your mix, but opening similar credit cards won't increase your credit diversity.

    New accounts opened: VantageScore® takes into account the last time you opened a new account and how often you open new accounts. If you're new to building credit, opening too many accounts too fast may not be advised. If you have long-standing credit and want to diversify, opening new accounts can be good.

    FICO® score metrics

    Now, consider the five metrics used by FICO® to figure out your credit score ranked by score impact:

    • Payment history 
    • Amounts owed 
    • Length of credit history 
    • Credit mix
    • New credit applications

    So, how many credit cards should you have?

    After doing the math to make sure you can afford payments and fees, consider how many cards you need. When evaluating how many credit cards you need, consider:

    • Be across multiple networks: In case a merchant doesn't accept Visa or Mastercard. This is especially helpful if you're traveling.
    • Deliver different types of rewards: Make sure your credit cards don't offer overlapping rewards, making them redundant. If your card doesn't have rewards, you could be missing out.
    • Cover the unexpected: It's important to have emergency savings and not solely rely on credit cards. In a pinch, an extra credit card can be a lifesaver.

    If you keep two credit cards in your wallet, consider keeping a third at home in case your wallet gets lost or stolen. An emergency credit card should have a high credit limit, a low interest rate and no annual fee.

    What if I have too many credit cards?

    If you find yourself running into the issue of having too many credit cards, you can use the multiple accounts feature to help manage them and avoid overspending. Try to keep your credit utilization low, also known as the percentage of your total credit that's being used. These different credit cards may be used for different expenses, but it's important to make sure that the balances are being paid by the statement date to protect your credit score. It may be a good idea to keep the accounts open instead of closing them. Closing an account can negatively impact your credit score.


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