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How many credit cards should I have?
When asking the question, “How many credit cards should I have?” we need to look at the pros and cons of owning more than one. Is there a magic number of credit cards to own or can having too many cards actually be a bad thing?
You may have a wallet bursting full of credit cards that you don’t use anymore – ones that maybe you signed up for to get the points or miles or a particular new offer, and you’re not sure whether adding to them (especially if you’ve seen an irresistible sign-up offer) would make sense, or if it would negatively affect your credit score.
We take a quick look at the costs versus benefits of having more credit cards than less.
How many credit cards should I have? Costs versus benefits…
The good news is, the number of credit cards you have doesn’t greatly affect your credit score. When the credit bureaus calculate your score, the number of credit cards you have is a very minor part of the process, albeit a slightly important one, as explained by Investopedia:
Your payment history is 35% of your credit score, the total debt that you owe is 30% and the rest is made up of the length of your credit history, the new credit you have taken on and the type of credit you have used. The total number of credit accounts that you have (including mortgages, auto loans, store cards and student loans, as well credit cards) makes up just 10% of your score calculation.
According to 2014 statistics, the average American owns 3.7 credit cards. Credit Karma states that owning multiple credit cards open is actually good for your credit score, partly because a variety of credit cards shows your creditworthiness. The key according to them is to have just the right amount of credit cards – not too many and not too few. This means you aren’t getting into too much debt, while showing lenders that you’re using the credit responsibly.
Credit Karma’s members with around 7 cards each tend to have a credit score of 800+, while those with around 6 cards tend to have an average credit score of 700-799.
Of course one of the excellent benefits of owning more credit cards is the multiple sign-up bonuses you can get, especially in the travel world for miles and points. Many of us wouldn’t be able to travel anywhere near as much without them.
So just how many credit cards should I have?
There isn’t a magic number of credit cards that will get you a perfect score or necessarily increase it, as it really depends on your own financial situation. The best strategy is to select several cards that best suit your needs and ensure you use them all responsibly. Avoid multiple applications at one time, though, as it can look like you’re desperate for the credit – spread out your applications instead.