How Many Credit Cards Should A Person Hold?

Must read

Monika Ahuja
Monika Ahuja
I have a specialization in finance but I have written for several domains including real estate, automobile, home decor, e-commerce etc. I worked in sales for over 4 years, before choosing to become a content writer. As a writer, I have worked closely with several national and international brands and have handled their social media and website content for over 3 years. With my diverse experience in the field of writing, I am looking forward to creating some engaging content for my readers.

There are several credit cards available, each with their unique rewards scheme for purchases made online, at petrol stations, grocery stores, and on trips. Although getting all these benefits may make it seem like the greatest option to collect all the cards, that isn’t always the case.

The appropriate number of credit cards to hold varies based on your circumstances. While some people may be able to manage appropriately with only one card, others may be able to manage with four or five. Ensuring you can consistently make your payments on schedule is crucial. Ultimately, having a credit card that offers miles for each travel transaction won’t help you if you accrue large expenses and are unable to settle them.

Also Read: Top 10 Credit Cards in India To Boost Your Finances

How many credit cards are too many or too few?

Having two or three credit cards can indeed raise your credit score. A few credit cards with a clean credit history demonstrate your financial responsibility, much as receiving high marks in a subject does. However, having too many credit cards might backfire if you fail to pay them all, much like having too much schoolwork can result in poor marks. That may lower your credit rating.

Being accountable is essential. Having a few credit cards may help your credit score if you can manage them and make your monthly payments on time. But use fewer cards if you’re concerned about managing deadlines and payments. Recall that responsible credit use is the key, not necessarily how many cards you carry in your wallet. 

For instance, if you have a small number of credit cards, it may not take much spending to consume a large portion of your credit limit. Credit utilization measures how much of your available credit is being used; those with the highest credit ratings often utilize less than 10% of their limits. In general, you’ll be well-positioned if you stay below 30% of your restrictions. Having several cards might assist you in minimizing your credit use.

How many credit cards should I have?

The number of credit cards you should have depends on your spending patterns and timely bill payment. In the US, the average person possesses three credit cards and a few shop cards. As they age and require credit for various purposes, most people gradually accumulate credit cards.

The crucial point is that you must be at least 18 to apply for a credit card, and if you’re younger than 21, it may be difficult to get authorized.

Developing sound money management practices is crucial when you first start using credit. A reliable source of income is crucial, but it’s not the only one. Additionally, you must be organized know how to to oversee your finances, and be capable of making timely bill payments.

Potential issues with having multiple credit cards

Having many credit cards has advantages and disadvantages. This is the reason why:

  1. Too Many Applications Can Affect Your Score: Your credit score may be somewhat lowered each time you apply for a new credit card. It is comparable to receiving a low grade on your report card. Lenders may view your excessive card applications as a sign that you need credit. Thus, to avoid this, spread out your applications by around six months.
  2. It’s Hard to Keep Track of Everything: You’ll need to keep track of additional due dates and spending caps for all your cards. Adjust your due dates or set up automated payments to prevent missing payments from arriving simultaneously. Additionally, you may track your expenditures and credit score using free applications.
  3. Large Purchases Require Proper Credit Timing: Are you going to buy a car or a house? Avoid requesting new credit cards just before. Even while it could just slightly decrease when you apply, it will take around six months for your score to increase. Therefore, wait to apply for new cards to maintain a good credit score for that major purchase.

Also Read: Credit Cards: Advantages And Disadvantages Of Using Them

The potential impact of multiple credit cards on your credit scores

Thinking about getting a new credit card? The short version of how it might impact your credit score is as follows:

  1. Credit Utilization Ratio: This is the proportion of your available credit that you are using. Your score will be better if this number is lower. Try not to go beyond 30%. As long as you refrain from binge spending, getting a new card may assist in this situation if it raises your total credit limit!
  2. Payment history: The single biggest element influencing your score (about 35–40%) is your payment history. Thus, timely bill payment is far more crucial than the number of cards you own.
  3. Credit Age: Lenders prefer a lengthy history of appropriate credit utilization. However, this isn’t limited to a single outdated card. What matters is the average age of all your cards combined.
  4. Closing Cards: Even if you don’t use your old cards often, it’s generally advisable to leave them open. Your credit score may be somewhat impacted by canceling a card, particularly if it was one of your earlier accounts. However, closing the card can be worth a brief drop in your score if it has exorbitant fees or poor service.

Regardless of how many credit cards you carry, it’s important to utilize credit responsibly.

Avoid using all of your credit cards! A few(2-3 cards) might raise your credit score if you make on-time bill payments. However, having too many cards can lower your score if you miss payments. Don’t only use credit cards to accrue points; use them sensibly. Prioritize developing sound financial practices, and then add more cards as needed. Remember that a strong credit score is more beneficial than any rewards program.

- Advertisement -

More articles

- Advertisement -

Latest article