How Many Credit Cards Should You Have?

According to data compiled by TransUnion from the first quarter of 2017, the average number of credit cards per person is 2.69. There's no "one size fits all" when it comes to the number of credit cards you should have in your wallet. How many credit cards you should have depends on many factors. The short answer: you should have at least two – ideally each from a different network (Visa, Mastercard, American Express, Discover, etc.) and each offer you a different kind of rewards (cashback, miles, rewards points, etc.).

How to decide how many credit cards you need?

Well, figuring out how many credit cards you need is different from figuring out how many credit cards you want. You have to understand the result of having one or more than one credit card. First, you'll want at least one credit card so you can establish a record of managing a revolving credit account in your credit file. Using just one credit card responsibly—by spending within your means and paying your bill on time—can fill your credit report with positive information. Then, you can consider having more than one credit card. Holding multiple credit cards can help with your credit utilization ratio or amount of available credit you're using-which is a key component of your credit scores. If you gave more than one credit card, you'll also have a higher overall credit limit-which can help keep your utilization ratio at a good level. 

Does the number of cards impact my score?

The number of cards you have does not directly influence your score. If having more cards means you use less of your available credit, that can help your credit score. But if having lots of cards means you become disorganized and occasionally pay late, that can hurt your score. More important than the actual number of cards is whether you pay on time and use a relatively small portion of your available credit.  Keeping your balances well below 30% of your available credit should help you maximize your score. Here are five habits that will help polish your credit profile regardless of the number of cards you have.

• Pay on time, every time.

• Use credit lightly. Keep utilization under 30%, and lower is better.

• Keep credit card accounts open unless you have a compelling reason to close them.

• Have both installment loans and credit cards.

• Space credit applications about six months apart so that you don't have several credit checks at once.

How many credit cards is considered too many?

There is no rule on how many credit cards is too many. It will vary by whether you are spending too much, can manage all your payments, can afford all the annual fees and are getting good value from each card. If you can't keep up with all your monthly payments, it's a good sign that you're spending beyond your means on your cards. Consider not using all of your cards and leaving one or more of them at home so you don't get tempted to spend more than you should. 

Too many credit card applications in a short period of time will result in multiple hard inquiries. These inquiries are recorded every time you apply for new credit and they remain a part of your credit reports for up to two years. When too many of them occur in a short period of time, they can negatively impact your credit scores.

When does it make sense to get another credit card?

Adding a new credit card to your wallet can be a good move if you're looking to earn new rewards, want to transfer a balance to a lower-interest card, or are looking to lower your utilization ratio.

If you're planning a trip, for example, you may want a credit card that offers great travel rewards. In this case, consider applying for a card that offers an introductory bonus you can redeem for travel or hotel stays.

Getting a new card may also help you save on high-interest payments. Balance transfer cards allow you to move high-interest card balances to a low or even 0% annual percentage rate (APR) card for a set period of time.