How Many Credit Cards Should You Have?

Key takeaways:

• There isn’t a set number of credit cards you should have, but having less than five credit accounts total can make it more difficult for scoring models to issue you a score and make you less attractive to lenders.

• Having too many credit cards to comfortably manage may result in missed payments and drag your credit scores down.

• How many credit cards you have will impact your average credit age and utilization, factors that also affect your credit scores.

There's no magic number of credit cards to pursue, but some guidelines can help you navigate your way to solid financial ground. The number of cards you have — and their combined credit limits — can affect your credit scores, which then impacts your ability to secure important things like car loans and apartment rentals.

How many credit cards is too many or too few?

Credit scoring formulas don’t punish you for having too many credit accounts, but you can have too few. Credit bureaus suggest that five or more accounts — which can be a mix of cards and loans — is a reasonable number to build toward over time.

Having very few accounts can make it hard for scoring models to render a score for you. Four or fewer accounts is generally considered to be a "thin file." It's harder to score high with a thin file than a fatter one, and lenders also might view thin files as riskier.

And with a thin file your credit actions can have a bigger effect on your scores than if you had more accounts. A good example: With few cards, it might not take much spending to use a lot of your overall credit limit. How much of your credit you have in use is called credit utilization, and people with the best scores tend to use less than 10% of their limits. Generally, anything below 30% of your limits will put you in a good position. More cards may help you with keeping credit utilization low.

On the other hand, if having lots of cards makes your life complicated and you miss a payment, that can devastate your scores. Make sure you're able to stay on top of due dates.

How many credit cards should I have?

Your spending habits and ability to pay all bills on time determine the sweet spot for you as an individual.

Americans on average have 3.9 credit cards as of the third quarter of 2023, according to credit bureau Experian. Most people build their credit portfolio over time as they age and their credit needs expand.

However, it’s important to note: You must be at least 18 years old to apply for a credit card, and it might be difficult to get approved if you're under 21.

As you start out with credit, It’s a good idea to focus on building good financial habits. Having a reliable income is only one piece of the puzzle. Things like good organizational skills, a solid understanding of how to manage money and an ability to meet deadlines are crucial.

Potential issues with having multiple credit cards

There are benefits to having multiple credit cards, but there are also potential challenges to consider, too.

Spacing out credit card applications

Each application for credit causes a hard inquiry, which can ding your scores by a handful of points. The effect is small and fairly short-lived. However, applying for multiple credit cards in a short period of time can be interpreted as a sign of credit risk, and all those hard inquiries add up. Spacing credit applications about six months apart can prevent multiple hard inquiries from affecting your scores.

Managing multiple billing cycles

This might seem obvious, but the more credit cards you have, the more due dates and credit limits to keep track of. One solution is automating monthly payments or changing your due dates to the same day or to align with paydays to make sure you remember to pay your balance in full. You can also sign up for a free credit score dashboard with NerdWallet to track your credit utilization, spending and more.

Timing credit applications with big future purchases

If you’re planning to make a big purchase — like a new home — it’s a good idea to time your credit applications to protect your credit scores. Applying for a single credit card can ding your credit scores but the points will return in about six months. Keep this time frame in mind and hold off on credit card applications.

Potential impact of multiple credit cards on your credit scores

Here are a few things to keep in mind if you're thinking of opening (or closing) a credit card:

Your credit utilization

The portion of your credit limit that you have in use, also called credit utilization ratio, accounts for about one-third of your credit scores. In general, keeping your balances well below 30% of your credit limit helps maximize your scores, and lower is better.

Opening new cards could benefit your credit scores by increasing your overall credit limit. That will decrease your credit utilization as long as you don't spend more and send your balances up.

Your payment history

About 35% to 40% of your credit scores is determined by your payment history, making it the biggest factor affecting your scores. That means paying on time is far more important than how many cards you have.

Your credit age

Creditors like to see a long, stable credit history. It’s not enough to have one really old card, though. Your credit scores consider the average age of all of the cards you have.

That doesn't mean you can never close a card. If you have a compelling reason — like high fees or poor service — it may be worth a possible temporary ding to your score. If you have multiple cards with the same issuer, you can also ask to switch your credit card to a no-fee version instead of closing it. This typically lets you keep your credit line, so your overall credit utilization is not affected.

Choosing between cards? Rewards and perks might make the difference

If you’re thinking about opening a credit card, it’s smart to think about how and where you spend your money. Many credit cards offer specialized rewards or other benefits that can be added perks to your regular spending. If you like racking up rewards points, you might want to explore the best cards to maximize grocery, travel or gas spending or ones that offer cash back.