How Many Credit Cards Should You Have?

July 13, 2018

Does having more than one credit card hurt your credit score?

If you are like most people, your answer to that question is probably, “Of course it’s bad for your credit!”  You imagine that, with every new card, your credit score will drop lower and lower until no lender would dare give you credit.

Would it surprise you to find out that it often has the opposite effect?

Understanding how credit scores work can take some effort, but in short, having multiple credit cards can boost your score by increasing the amount of credit available to you and showing lenders that you are continuing to manage that credit responsibly.

Case in point:  a consumer with a credit score of 797 opened a new Chase Freedom card and was shocked to see that her score jumped to 819; because her spending habits did not change dramatically, she now had more credit available to her while her “debt utilization ratio” (how much she owed compared to her total limit) decreased.

Your credit card score is also improved by holding credit for long periods of time.  So, if you’ve had that trusty MasterCard since college but it just doesn’t hold a candle to your shiny new Amex, resist the urge to either cut up the older card or cancel it altogether.  Your score looks at the “age” of your credit, so having an “elderly” credit line makes you look that much better.  Keep your infrequently-used accounts active by buying something small every so often.

In addition to higher credit scores, strategic use of multiple credit cards can put free money in your pocket.  Know what rewards your cards offer (you do have rewards cards, right?) and maximize them!  Here are some examples:

  • in January, February, and March, the Chase Freedom card offered a staggering 5% back on three select categories, one of which was groceries.  Yes, you read that correctly:  you could have been saving 5% on something you undoubtedly purchased weekly, if not more often.
  • Our partner Citi® recently introduced the Citi® Double Cash Card, where you earn 1% on every purchase AND 1% on every payment.  Smart credit card users will realize that, in effect, makes it a twice as much from the rewards program.

Because rewards programs can change – the Chase Freedom card being a prime example – you will want to keep an eye on which cards to use for specific types of purchases; gasoline, groceries, restaurants, and travel are four of the most common categories where credit card companies will try to entice you to use their card with special incentives like extra cash back for a limited time.

There is one very significant stipulation for this idea that having multiple credit cards is a net win:

It applies to consumers who are using credit responsibly.

Holding more than one credit card at a time might not be a wise choice for you if any of the following is true:

  • You regularly carry a balance instead of paying it in full every month. 
  • You find yourself playing the “balance transfer game” to manage your monthly payments.
  • You are already deeply in debt.

When used wisely, multiple credit cards can be very rewarding and beneficial for your overall credit score.

If you would like to explore your credit card options, click here to find the card that is right for you. 

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