The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
As people build up their financial understanding, many people wonder: how many credit cards should you have? Ultimately, the right number for you will depend on your financial situation and needs. Some individuals benefit from having a single credit card, which offers easy management and fewer decisions. On the other hand, some people are able to maximize credit card rewards by keeping track of many different cards—often five or more.
The number of credit cards you have can affect your credit score both directly and indirectly. Read on to learn more about how to find the right number of cards for you, how many cards people typically have and how having multiple cards can affect your credit score.
What’s the right number of credit cards for you?
While there’s no ideal number of credit cards, it is possible for you to determine a good number of accounts for your own situation.
According to wealth management expert Hutch Ashoo, “The amount of credit cards a person should have is entirely dependent on their specific situation and financial history. Some people may get by with just one or none at all, while others can thrive with multiple cards.”
Ashoo notes that deciding on the right amount for you depends on how well you’re managing your current credit: “It’s critical to pay off the entire sum on each card each month. Having many cards entails a great deal of responsibility. If you can’t pay off every bill every month, avoid getting more than one or two cards, and avoid the urge to spend more just because you have more credit.”
Consider whether any of the following circumstances align with your own:
- You’re just starting out with credit cards. (Total credit cards: one.) If you’re looking to get a first credit card, it’s usually wise to stick with a single account. Managing credit can be difficult, and adding multiple accounts right from the start can add to the challenge. If you’ve never had a credit card before, you could consider getting a secured credit card, which has restrictions that help you build credit while learning the ropes.
- You’re looking to start generating rewards with your credit cards. (Total credit cards: two to four.) If you’ve built up your score to the point that you can apply for rewards cards, that may be beneficial for you. Many people have a cash back card with no annual fee as well as a store credit card with rewards for a retailer they shop at often.
- You’re managing significant amounts of credit and have a higher income. (Total credit cards: five or more.) Some individuals with high incomes and significant credit card spending can benefit from rewards cards with annual fees. For example, business travelers may get a travel rewards card that offers benefits like airport lounges or airline miles. Before working toward one of these cards, ensure that your spending habits and financial situation will justify the annual fee.
Again, the number of credit cards you choose to have will depend a lot on your situation, like how much you earn and spend as well as how you’re managing credit currently. In most cases, you’ll want to consider adding more credit cards to your name only if you have a specific reason for doing so. Having credit cards for their own sake is usually not advisable, so consider carefully before opening a new account.
How many credit cards do people usually have?
Although everyone has different needs for credit, the average number of credit cards that American adults have is nearly four, according to Experian®, one of the three credit bureaus.
Of course, the average number of cards varies based on several factors. For example, in 2020 residents of New Jersey had the most number of credit cards on average in the United States (4.54), while Alaskans had the fewest credit cards on average (3.06).
Even more interesting is the generational gap among credit card holders. Members of older generations tend to have more credit cards, but we also see older people starting to close accounts as younger people open more lines of credit.
Average number of credit scores by generation | ||
---|---|---|
2019 | 2020 | |
Gen Z (18 to 23) | 1.76 | 1.91 |
Millenials (24 to 39) | 3.18 | 3.18 |
Gen X (40 to 55) | 4.35 | 4.23 |
Baby Boomers (56 to 74) | 4.81 | 4.61 |
Silent Generation | 4.00 | 3.64 |
What are the pros and cons of having more than one credit card?
If you’re trying to decide whether to stick with a single card or apply for a new line of credit, it can be useful to think about the advantages and disadvantages of having more than one credit card.
Some of the benefits of having multiple cards include:
- If one card stops working, you have another card available.
- You can optimize rewards by using perks from different cards.
- You may be able to improve your score if all cards are used responsibly.
On the other hand, having multiple cards could have several disadvantages:
- Keeping track of multiple accounts can be difficult, especially for making on-time payments and watching for fraudulent activity.
- Annual fees from multiple cards can quickly add up, making rewards possibly less useful.
- Getting too many new cards at once could lower your score by dropping your average age of credit and placing hard inquiries on your credit report.
Whether you choose to have a single credit card or many, you’ll want to get in the habit of checking your credit score as well as your credit report. Your credit report shows what each of the three credit bureaus knows about your credit history—accounts, balances and payments. If you notice any inaccurate information, like an account that doesn’t actually belong to you, you’ll want to file a dispute with the credit bureaus to get that information removed.
If you’re working to get negative items removed from your credit report or if you’ve had any other difficulties managing credit, you may find it helpful to work with the credit repair consultants at Lexington Law Firm, who can help review your report and provide support.
Reviewed by Brad Blanchard, Supervising Attorney at Lexington Law Firm. Written by Lexington Law.
Brad is an attorney at Lexington Law firm whose practice is primarily focused on corporate compliance. His focus is primarily in the areas of marketing and advertising of financial services. He regularly deals with issues related to FTC Regulation 5, UDAAP, FCRA, FDCPA, CROA, TCPA, and TSR. He also has experience in LLC formation, contract review and negotiation, and trial and litigation experience in the areas of consumer protection and family law. Prior to joining Lexington Brad worked on Department of Labor administrative law cases and federal class action lawsuits. He also externed for a Utah State Court trial judge where he worked on both civil and criminal cases. Brad is licensed to practice law in Utah and Ohio. He is located in the North Salt Lake office.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Source: lexingtonlaw.com