Should You Have More Than One Credit Card?
The ideal number of credit cards comes down to your spending habits, personal finances, and financial situation.
Credit cards are valuable tools for paying bills, earning points, or making large purchases — as long as you’re able to pay them off in a timely manner.
Unfortunately, rising inflation rates has made more Americans turn to their credit cards for basic purchases. A 2023 report from Bankrate found that 35% of American adults are carrying credit card debt from month to month — up from 29% last year [*].
Left unchecked, the high interest rates on credit card debt can compound and become unmanageable.
Even if you use your credit cards responsibly, it’s not always a good idea to carry balances across multiple cards. But that doesn’t mean there is an ideal number of credit cards that everyone should have.
According to the latest figures from Experian (one of the three major credit bureaus) [*]:
On average, Americans have ~4 credit cards with an average credit limit of $30,365.
If you’re considering opening a new credit card or are looking to consolidate your credit card debt with a balance transfer, here’s what you need to know.
How Many Credit Cards Are “Too Many?”
There’s no straight answer for how many credit cards are “too many.” Instead, opening and using multiple different credit cards can either help or hinder your financial situation. It all depends on how you use your cards and manage your debts.
For example, spreading debt across multiple cards can actually help build good credit. That’s because your credit utilization ratio (i.e., how much of your available credit you use each month) is one of the main factors in determining your credit score [*].
Let’s say you have a credit card with a limit of $1,000 and you spend $800. That would mean you have a credit utilization of 80% — significantly higher than the suggested 30%.
Instead, if you have multiple credit cards each with a $1,000 limit, you could spread that $800 across them to keep your credit utilization score below 30% — and keep your credit score strong.
There are other potential benefits to owning multiple credit cards. For example, you could take advantage of specific rewards programs by using a cash back card for your daily purchases and a travel credit card for booking vacations. And of course, extra credit can help if your financial situation suddenly changes.
However, the caveat to all of this is that it only makes sense to have multiple cards if you manage them responsibly. Otherwise, you’re setting yourself up to take on a debt load you may not be able to handle.
How Does Having More Credit Cards Affect Your Credit Score?
The total number of credit card accounts you have does not necessarily play a direct role in your overall score. However, having multiple credit cards can either hurt or help your score, depending on how you use them.
Here are the main factors that influence your FICO credit score and how having lots of credit cards can impact them:
1. Payment history
Payment history is the single biggest factor that impacts your FICO score, and represents 35% of your overall credit score.
Payment history refers to a credit borrower’s reliability and whether or not you pay your bills on time. Late payments will hurt you, since credit card companies can be quick to report a late payment to the major credit bureaus.
If you’re going to open multiple credit cards, make sure you’re able to keep track of (and handle) the amounts owed on each.
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2. Credit utilization
Credit utilization is the second biggest factor and makes up 30% of your total credit score. Credit utilization is the ratio of available credit compared to the amount you’ve spent.
If you use more than 30% of your credit limit on any given card, that’s considered to be a high credit ratio and can hurt your FICO score. If your credit card has a credit limit of $10,000, you should aim to put no more than $3,000 on it each month.
Lowering your credit utilization rate by spreading your spending across multiple cards may help increase your credit score over time. Try lending preference to credit cards that offer perks like low interest rates, cash back incentives, rewards programs, travel rewards, airline miles, and exclusive deals from your favorite retailers.
For example, if you open a rewards credit card that has a higher credit limit than your other cards and allows you to collect cash back on everyday purchases, this may boost your credit score — assuming you’re able to pay your bills on time and maintain a low credit utilization.
3. Credit history
The longer your credit history, the higher your score. Your credit score takes into account how long you’ve had each account open. In a FICO study of people with excellent credit scores, the average age of each cardholder’s account was 8 to 11 years.
What about credit cards with a zero balance?
Keeping a low credit utilization ratio is good, but having too many credit cards with zero balance may negatively impact your credit score.
If your credit cards have zero balance for several years due to inactivity, your credit card issuer might stop sending account updates to credit bureaus. With less credit activity on your report, lenders and other financial services companies may struggle determining whether or not you’re a responsible credit borrower.
Closing unused cards may also have a negative impact on your credit score. Closing your cards will shorten the length of your credit history, which may result in a lower score.
To prevent this from happening, it may be wiser to spend small amounts on the cards you use less frequently and then pay those credit card balances in full on their due dates. That way, your credit utilization rate will remain low, and you’re able to show lenders that you’re a reliable debtor.
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4. New credit
New accounts comprise 10% of your credit score. If you submit too many new credit card applications at once, it’s likely that your score will be negatively impacted.
This is because opening new credit cards will create a hard inquiry on your credit report. Hard inquiries remain part of your credit report for two years, but your score may bounce back in as little as six months afterward.
Zoom out: FICO warns that opening new credit cards in a short period of time just to increase your available credit (and lower your credit utilization) can actually lower your score if you’re not careful [*]. Beware of opening new cards in rapid succession — especially if you’re not going to use them regularly.
5. Credit mix
It’s important to have a varied mix of accounts to show that you're able to manage your credit. Credit bureaus will reward you with a higher score if you have multiple accounts that you pay on time while maintaining a low utilization ratio.
Although using different types of credit can be a good thing, it may also hurt your score. Credit cards are considered one type of credit, so opening too many of them won’t actually increase your credit mix.
A variety of credit accounts could be a mix of credit cards, mortgage, student loans and auto loans. However, you should only open new credit accounts if you are confident in your ability to repay your debts.
How To Decide When To Open a New Credit Card Account
While there are no steadfast rules about opening a new credit card, here is a general list of questions to answer before you open a new card:
Will my credit score take a hit after submitting this new credit card application?
Have you opened new credit cards or lines of credit recently? Remember that each credit card application requires a hard inquiry on your credit file. Each inquiry — or “hard pull” — can shave up to five points off your FICO score [*].
Will I actually use the rewards and benefits this card offers?
Signing up for cards with travel rewards or cash back offers can feel like a win-win. But many of these cards come with high annual fees or higher-than-average interest rates. Make sure that you’re only signing up for cards you’ll actually use. Unless you travel a lot, a good cash back card is a safe choice.
Does this credit card come with an annual fee that I won’t be able to afford?
Also, look to see if the annual fee can be waived. Some credit card issuers won’t charge you if you maintain a certain balance in your bank account.
Does this new card have a lower interest rate than my other cards?
If you carry a monthly balance, a high interest rate can quickly become a serious issue. Moving your balance to a lower-interest card can be a good way to save on interest charges.
Can I transfer my high-interest balances to this new card without paying a fee?
Consolidating your debts via a balance transfer may enable you to pay off your credit card bills faster. A balance transfer lets you transfer your remaining balance from a high-interest credit card to one with lower interest. Some credit cards will waive the fees normally associated with a balance transfer as part of their introductory offer.
Does this card have a higher credit limit than my other cards?
A higher credit limit can boost your credit utilization score. But it also opens up opportunities for overspending.
Will I pay off this card in a timely manner to maintain a low credit utilization?
Above all else, be realistic about your financial situation. More credit doesn’t always equal good credit. If you’re looking to open a new card because your current ones are maxed out and you can’t pay them off, you might need to take a different approach.
Answering these questions realistically and truthfully will help you decide if it’s the right time to open a new line of credit.
It’s definitely not a good idea to open a new credit card if you:
- Have already opened multiple credit cards in the past six months.
- Will struggle to maintain a low balance and make timely payments.
- Don’t feel that you would benefit from the rewards and perks.
- Are planning on applying for large financing soon (such as a mortgage or auto loan).
Tips On Managing Multiple Credit Cards
- Set up automatic minimum payments. Missing payments on any credit card can quickly lower your credit score. Set up minimum payments across all of your cards to ensure nothing gets missed.
- Match rewards cards to your lifestyle and spending habits. For example, you could take advantage of the rotating 5% cash back on the Discover it Cash Back card or sign up for a travel card that offers the best rewards with your preferred airline.
- Consider store cards where you shop regularly. Some major retailers issue credit cards that only work for store purchases. These are a great option if you regularly shop at certain stores or want to take advantage of specific features, such as cash back, reward programs, or extended warranties.
- Choose a card to finance large purchases on. If you’re looking to make a large purchase, choose a credit card with a low interest rate as well as additional benefits (such as buyer protection and warranties).
- Take advantage of introductory rewards. Many new cards offer low interest rates, no annual fees, or deals on balance transfers when you first sign up. Make sure you take advantage of these but also that you know when they change. For example, if your interest rate is scheduled to increase after the first 12 months.
- Monitor your credit score for changes. A credit monitoring tool like Aura will alert you to any changes to your credit score — including legitimate changes as well as any signs of fraud — up to 4x faster than other services.
What Are The Best Credit Cards for Consumers in 2023?
Not all credit cards are created equal — some offer great bonus points and rewards on everyday purchases, while others are ideal for travel.
Here are some of our top credit card picks for consumers (and business owners):
Chase Sapphire Preferred® Card
Those who are new to the world of credit card spending and have been bitten by the travel bug may find their best credit card in the form of the Chase Sapphire Preferred® Card.
It offers some impressive rewards like:
- 10x points on dining purchases with Ultimate Rewards®
- 5x points on flights.
- 3x points on all other travel purchases.
- 1 point per dollar spent on all other purchases.
- Points are worth 40% more for travel booked through Chase Ultimate Rewards.
The Chase Sapphire Preferred® Card also boasts a general sign-up bonus with a rewards structure that’s easy for everyone to understand. However, all of these features come at the cost of a higher-than-average annual fee.
It has an impressive welcome offer, too, as new cardholders can earn 60,000 bonus points after they spend $4,000 on purchases in the first three months of their account being open.
Chase Freedom Unlimited®
If you’re looking for similar benefits without the high annual fee, you may want to consider the Chase Freedom Unlimited® card. Along with a $0 annual fee, the Chase Freedom Unlimited card comes with some pretty impressive perks, including:
- 5% cashback on grocery store purchases on up to $12,000 spent in the first year (excluding Walmart and Target).
- 5% on travel purchases through the Chase Ultimate Rewards® card.
- 3% cashback on dining at restaurants and drugstore purchases.
- Unlimited 1.5% cash back on all other purchases.
It also provides customers with a $200 bonus after they spend $500 on purchases in the first three months from opening an account.
American Express® Gold Card
For the foodies out there, the American Express® Gold Card provides some serious perks on dining. If you find yourself always on the prowl for the newest restaurant (or love to cook at home), enjoy perks like:
- 4x points on dining at restaurants, including takeout and delivery.
- 4x points on grocery purchases at your favorite supermarkets.
- $120 to use with Uber Eats or Uber rides.
This card is also great for those who want to travel, with 3x points on flights booked. It rewards consumers for spending, too, with a welcome bonus of 60,000 points after spending $4,000 in the first six months.
American Express® Business Gold Card
There’s also the American Express® Business Gold Card, which has perks that are geared towards high-spending small businesses. What sets this credit card apart from others is that the customer decides which category in which they will receive bonus points.
This card offers 4x points in the top two spending categories each month, in addition to 25% cash back on eligible flights booked using the card. So, if one month your highest category is advertising, and the next it’s shipping, businesses will still earn points in those categories.
Blue Cash Preferred® Card from American Express
Another great option from American Express is their Blue Cash Preferred® card, which is typically a great choice for everyday family purchases. The rewards that customers can enjoy on this card include:
- 6% cash back at supermarkets.
- 6% cash back on select streaming services.
- 3% cash back on taxis, rideshares, parking and trains.
- 3% cash back at gas stations.
- 1% cash back on other purchases.
Customers also enjoy a $2500 statement credit after they make $3,000 in purchases with their new card within the first six months.
Citi® Double Cash Card
The Citi® Double Cash Card offers generous cash back rewards. Not only is there no annual fee, but users of this card will earn up to 2% cash back—1% when the purchase is made, and 1% when payment is made on the account. There’s also no limit on the amount of cash back that can be earned.
Customers love this card because it’s straightforward and there aren’t a lot of rules or exclusions that they have to remember.
Capital One Quicksilver Cash Rewards
Many consumers looking for a new credit card turn to the Capital One Quicksilver Cash Rewards card. This credit card offers low fees, high rewards, and low interest, plus no annual fee. Those who use this card earn 1.5% cash back on every purchase, so there are no exceptions to how a consumer can earn money back.
With a simple rewards program, a solid return, and no annual or foreign transaction fees, it’s a popular choice across the board.
What Happens If Someone Steals Your Credit Card?
One often ignored aspect of owning multiple credit cards is that it makes you more vulnerable to credit card fraud.
Last year alone, the FTC received almost 400,000 reports of credit card misuse, with Americans losing nearly $150 million [*].
If scammers steal or gain access to your credit card numbers, they could:
- Make unauthorized purchases in your name.
- Damage your credit score — leaving you to spend weeks or months disputing fraudulent charges.
- Open new bank accounts or take out loans in your name.
- Steal your identity and use it to commit other types of fraud.
Are your liable for fraudulent charges if someone steals your credit card?
A thief can use a stolen credit card to rack up unauthorized purchases in your name. If you report the theft after they’ve already used your credit card, you may be liable for the fraudulent charges to a maximum of $50, by federal law; however, there are no liability charges if you report the card stolen before it’s used [*].
A stolen credit card will only impact your credit score negatively if you fail to report the unauthorized charges, and then don’t pay your credit card bill. You are always responsible for paying off your credit cards, unless you report the fraudulent charges and are able to prove they were unauthorized.
Can someone steal your identity if they have your credit card?
Credit card fraud is a major warning sign of identity theft, and it’s often the first step in a series of more serious identity-related attacks. Your physical credit card can be used to make unauthorized purchases in person and online.
Thieves may also use your personal information to contact your credit card issuer to open more cards under your name, or shut you out of your account. Or, they could use your credit card information to order gift cards that can't be tracked or reversed (a scam known as carding).
Be sure to regularly review your credit reports from any of the three national credit bureaus (Experian, TransUnion, and Equifax) to see if there are records of any loans or credit cards that you didn’t open.
If you discover anything suspicious, contact your credit card company and notify the credit bureaus to start a fraud investigation and get the account removed from your credit report.
For help with all of the above, Aura can monitor your credit and protect your finances.
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The Bottom Line: Keep Control of Your Credit & Finances
There’s no such thing as a bad number of credit cards to have, but having more cards than you can successfully manage may do more harm than good.
On the positive side, having different cards can prevent you from overspending on a single card—and help you save money, earn rewards, and lower your credit utilization.
No matter how many credit cards you have, be sure to always make your monthly payments on time and monitor your credit report for suspicious hard inquiries. Remaining vigilant will help you build a better credit score over time while keeping your identity and finances protected.