Should You Have More Than One Credit Card?

If you have a credit card, you're no stranger to credit card debt. As of late 2023, American credit card balances totaled $1.13 trillion, and the average American household owes $7,951 in credit card debt a year. Whether that debt was accrued for irresponsible purchases or to cover the rising costs of daily necessities like gas and groceries, no one wants to find themselves stuck in the black hole of debt. It might seem like the easiest solution is to stick to one card and one card only. But if you manage your money correctly, there are financial incentives for opening multiple credit card accounts — some of which might even help you get out of debt faster.

How Many Credit Cards Should You Own?

Short answer? There’s no set number of credit cards that you should own. The average American holds 3.84 credit cards as of 2024. While most financial advisors agree that the average consumer should have at least one credit card, opinions vary beyond that, with recommendations ranging between two to three cards to five or more. At the end of the day, it comes down to your financial situation, the perks you’re looking to take advantage of, and whether you can adequately monitor each of your credit accounts.

However, if you own only one credit card or have a card you never use, opening new lines of credit can offer some advantages. 

Credit Cards Offer Financial Flexibility

Sometimes, life gives us expensive bills that we weren’t planning for, from a leaky ceiling to an emergency vet visit. Paying off these unexpected bills isn’t always easy, so having several credit cards could help you increase your financial flexibility in an emergency. The more credit cards you own, the larger credit limit you’ll have, allowing you to split the cost of your bills over multiple credit cards rather than worry about coming up with the cash right away. When paying off those credit cards, you can also prioritize cards with higher interest rates to limit the interest you accrue over time.  

Credit Cards Boost Your Credit Score

Lenders look at a person’s credit score when determining what types of mortgages and loans they may be eligible for, among other things. The lower the score, the less likely you will receive a good deal. Having multiple credit card accounts could lead to a higher score because of a concept called credit utilization, which refers to the total percentage of available credit that you use. Multiple credit cards help keep your credit utilization low as long as your credit use percentage is below 10% to 30%. People who exceed that percentage often end up with a worse credit score.

To visualize how this works, let’s say you have a card with a $5,000 limit and suddenly incur a charge of $2,000 — that means a 40% credit utilization. But if you have two cards, each with a $5,000 limit, you can split that $2,000 cost over both cards while only using 20% of your credit limit on each. Credit utilization calculators are available online if you want to check your percentage.

You Can Take Advantage of Greater Rewards

Credit cards offer many different rewards in exchange for your consistent use, from cashback to airline points. The best way to maximize rewards is by opening multiple credit cards dedicated to other rewards programs. If one card offers points on travel, use it for booking flights or hotels; then, pay with the card that offers 3% back at restaurants when you go out to eat. The more credit cards you have available, the more benefits you can access.

Potential Risks of Multiple Credit Lines

For all of the benefits that come with opening multiple credit card accounts, there are also a few risks. It’s important to note that opening a new credit card may result in a slight, temporary decrease in your credit score. While that score will rise back to the original number if you pay your bills on time, opening too many cards in a short period could lead to a significantly lower credit score — space out new credit card applications by at least 90 days to avoid this problem.

Multiple credit cards also mean multiple billing cycles and payment deadlines. Staying on top of each credit card account is essential to avoid penalties. Remember to set a reminder to pay off your credit cards before the deadline to avoid additional charges.

Lastly, credit cards come with different annual fees, interest rates, and other expenses. If you aren't diligent, it might cost more to maintain a particular credit card than it's worth. Monitor your spending on cards with higher annual fees or limitations of use to ensure you are getting your money's worth.

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