Introduction
I’ll be honest: I don’t know the answer to this question. But that doesn’t mean you can’t figure it out for yourself.
The best number of credit cards will vary from person to person, depending on their spending habits, incomes, and financial goals. In general, however, the more cards you have and the higher balances they carry — at least in theory;
— the better off you’ll be when it comes time to apply for a loan or mortgage. So if you’re not carrying balances on your credit card accounts or using them frequently enough to earn rewards points,
-then, there’s no reason why anyone should have more than one or two cards in their wallet at any time.
The best number of credit cards will vary from person to person, depending on their spending habits, incomes, and financial goals.
We’ve talked about deciding which credit cards are suitable for you and even the best places to apply. But how do you know if you have too many or too few?
The answer depends on what your goal is. If your goal is just to get a lot of rewards points no matter what, then it doesn’t matter whether that’s one or 20 cards.
On the other hand, if your goal is to build up good credit to buy a home or car down the road, having too many open lines of credit can be detrimental in terms of your ultimate score.
In general, though:
- One: Per bank will give you great benefits but not affect your FICO score very much because there won’t be many variations from month to month.
- Two: Per bank means more rewards but also more effort (and time) required on those monthly bills;
plus, it will impact the FICO score on more than one card because there’s an increased likelihood that each creditor will report its delinquency status rather than sharing information about another company’s delinquency status with others within the same group.
Consider the way you use your credit cards.
Next, consider the way you use your credit cards. If you only use them for emergencies and other circumstances where you can’t afford to pay cash on the spot, then having one card should be fine.
However, if you use your credit card often and have many different needs with it—for example, if you have a separate card for groceries and another one for gas—then having multiple cards will save time and energy.
Finally, if you are a very busy person who doesn’t spend much time with their money management habits (or doesn’t have time), then using just one card is probably best for both convenience and safety reasons.
Think about how many credit cards you can keep track of.
So you’ve decided to start building your credit, but how many credit cards should you have?
The number of cards you can keep track of depends on how much money and time you want to spend managing them.
It also depends on how many cards are necessary for meeting your financial goals.
For example, if you plan on paying off all of your debt within a few years and then closing all accounts, fewer than five would probably be fine for most people (unless they had some sort of reward structure attached).
Consider the types of rewards you want out of a credit card.
For example, a cash-back credit card will give you a certain amount of money back for every dollar you spend. On the other hand, a travel rewards card will reward you with airline miles and hotel points.
Regarding which type of rewards are best, it depends on how much you travel and whether or not that’s your primary goal when using a credit card.
A travel rewards card will suit frequent flyers much better than someone who rarely travels by air or stays in hotels. If neither option seems like it would be helpful to you, consider an alternative such as gift cards or other items at local stores in exchange for purchases made on your credit card.
Determine how much your credit limit needs to be.
The first step to figuring out how many credit cards you should have is determining how much your credit limit needs to be.
A credit card’s limit is the amount of money the credit card company will allow you to spend.
The higher your credit score, the higher your card’s limit is likely to be.
Decide how long you need to carry a balance before paying it off.
While there’s no rule for how long you should carry a balance, your decision should be based on the type of rewards you’re getting.
If you are getting cash back rewards, you can afford to carry a balance for longer. If the reward points, paying off your credit as soon as possible is key to maximizing value.
The number of right credit cards for you depends on many factors.
The number of credit cards is an individual decision and depends on many factors. These include your financial situation, credit history, spending habits, and income.
- Your financial situation: If you’re in a position where you need to make a significant purchase or pay off debt, having more than one card can be helpful. It’s easier to spread the payments over multiple accounts instead of relying on one card with a high limit.
- Your credit history: Having multiple cards that are all paid off each month can help improve your credit score because it shows lenders that you’re responsible with money and has access to additional funds if needed (which makes them more likely to lend).
- Your spending habits: If you like charging things regularly but don’t want the hassle of managing multiple cards at once (or paying for them), having just one credit card may be better suited for your spending needs.
However, if carrying balances isn’t something that concerns you or doesn’t fit into budget plans for the month ahead—and if avoiding late fees is essential
—having several open accounts could be beneficial because they’ll offer additional options when making purchases online or elsewhere outside their networks where only certain types of plastic will work.
Conclusion
Ultimately, you should consider your financial situation to determine how many credit cards are right for you.
You might think that having more than one card would be beneficial, but if you’re unable to keep track of them all or don’t have enough income to meet minimum monthly payments each month, it could do more harm than good.
The best way to figure out how many credit cards work best for you is by looking at your spending habits and financial goals, then making a plan based on those factors.
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