How Many Credit Cards Is Too Many?


Kailey Fralick | The Motley Fool

The average American has 2.6 credit cards in their name, but individuals with the highest credit scores have seven credit cards on average, according to FICO data. This leaves many people thinking that it’s better to own a lot of cards. After all, if you can handle several credit accounts responsibly, won’t that increase your appeal to lenders?

While this can be true, having a bunch of credit cards can also lower your credit score, especially if you’ve opened several of them recently. Plus, if you start spending too much, you could find yourself buried under a mountain of credit card debt.

Woman holding a handful of credit cards

Let’s go over the pros and the cons of having many credit cards so that you can decide whether you want to add another to your wallet.

How having many credit cards can help you

The obvious benefit of signing up for multiple credit cards is the increased opportunity to earn rewards. If you diversify your cards well and use each one strategically, you can earn more rewards than you would if you had a single credit card. For example, one card may get you lots of cash back on fuel purchases, while another might reward you generously at the grocery store, and yet another might offer unbeatable rewards when you shop at your favorite retailer.

When it comes to your credit score, however, the benefit of more cards is the impact on your credit utilization ratio. This a measure of how much credit you’re using compared to how much you’re entitled to. Most experts recommend keeping your credit utilization ratio at 30% or less in order to keep your credit score high. Exceeding this amount could cause your score to dip. For example, if your available credit between all your cards is $30,000, then your total balance should not exceed $10,000 (and the lower, the better).

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