Wednesday, November 4, 2020

How many credit cards should I have?

Lots of credit cards image

Depending on how financially responsible you are with spending, there's a lot of upside to having more than one credit card. There's no perfect number of credit cards you should have, although experts suggest carrying at least two cards, if only to build-up your credit score.

For instance, you may carry an unlimited cash back rewards card for everyday use, along with a travel rewards card for more activity-specific rewards. Some experts recommend that you diversify with multiple types of credit cards for the greatest saving potential.

When considering applying for more credit cards, keep the following in mind:

  • Do not close old credit cards that you are not using. Having a longer credit history reflects well on your overall credit score. (There are exceptions, however, including if annual fees are no longer worth the effort.)
  • Find cards with extra benefits. Many cards offer additional perks like auto collision insurance, roadside assistance and liability protection; look for these cards and determine which rewards you would use most often.
  • Get cards that will reward you for the purchases you already make. If you spend a lot on groceries, a cash back card that gives you extra rewards for grocery purchases would be a wise investment.
  • Keep track of your payment dates and annual fees. Having multiple cards can make it difficult to remember which card payments are due when; stay on top of your expenses and keep your spending within your budget.
  • Don't go into credit card debt. Regardless of the number of credit cards you hold, make sure to pay off your entire balance in full each month. Credit card debt is a slippery slope.

Simply put, there is virtually no downside to having several credit cards at once, provided you can handle your balances responsibly and the annual fees are within your budget.

When it comes to your credit score, the only factors that will be affected by applying for multiple credit cards are the number of hard inquiries on your credit report, and the average age of your accounts (both of which affect only a small portion of your FICO score).

In fact, having many credit cards raises your overall credit limit, and lowers your debt utilization ratio.

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How many credit cards should I have?

Depending on how financially responsible you are with spending, there's a lot of upside to having more than one credit card. There's...