How Many Credit Cards Should You Carry?

By Nora Dunn. Last updated 12 November 2013. 1 comment

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How many credit cards should you have? Is it possible to have too many — or too few?

From personal preference to financial history to intended use, there isn't a straight answer. But here is some food for thought. (See also: Best Credit Cards for Groceries)

More Than One Is OK

First of all, let's dispel the idea that having more than one credit card is irresponsible. The only time having credit cards (be it one, two, or ten) is irresponsible is if the user is irresponsible. If you manage your cards with discipline, and pay them off in full each month, there are many benefits to having multiple credit cards.

Benefits of Multiple Credit Cards

Here are some reasons why you might want multiple credit cards, along with some tips and tricks about managing them effectively.

Backup Card

Credit cards aren't infallible; thus a backup card is prudent. This is especially applicable if you are traveling; I keep an emergency card stashed separately from my main credit card, so if one is stolen or lost (or just doesn't work), I can still pay my bill and make travel reservations.

Note: Make sure you use your backup/emergency card every couple of months (and pay the balance off right away of course); otherwise it could be canceled for inactivity. (See also: How to Avoid Getting Your Credit Card Canceled)

Rewards Credit Cards

If you're a frequent flyer mile collector, then the hefty sign-up bonuses and accumulation privileges of rewards credit cards are valuable. Some people apply for multiple cards each year solely for the sign-up bonus, then cancel the card a few months later. This strategy requires organization, a good credit rating, and diligence. Thankfully there are a few frequent flyer mile subscription programs that alert you to the latest credit cards deals to cut down your research time. (See also: Everything You Need to Know About Frequent Flyer Miles)

Brand Diversification

Not everybody takes Amex (as an example), so if that's your only credit card, you could be out of luck. Having a couple of different brands of credit card at your fingertips lessens your chance of being left out in the cold.

Dedicated Use Cards

With multiple credit cards, you can dedicate each one to certain purchases. Maybe one card gives you extra rewards points for fuel purchases, another provides automatic insurance for car rentals and flights, and another is dedicated to your online purchases. Dedicating cards to certain purchases can help you stay organized, and you can benefit from rewards-specific programs.

Supplemental Cards

Don't forget about supplemental credit cards, which act as a second credit card for an additional user to charge to the original account. This can be a handy alternative for spouses, especially if one spouse doesn't have a good credit rating (using a supplemental can help rebuild bad credit, too).

Things to Watch Out For

If you're looking at having a few credit cards, here are some things to monitor.

What type of credit card are you interested in?
How much do you spend per month?
Do you carry a balance?

Credit Rating

If you apply for too many cards and/or use them irresponsibly, your credit rating will go down, affecting your ability to qualify for other loans or a mortgage. (See also: 10 Surprising Ways to Hurt Your Credit Score)

Conversely, if you use your credit cards regularly and pay them off promptly and in full, you can build a stellar credit rating, allowing you to cruise through loan applications.

Credit Ratio

Having multiple credit cards means you could technically assume "X" amount of debt tomorrow if you maxed them all out. If you have a high ratio of available credit, even if you don't use it, you might not qualify for other loans or mortgages.

Annual Fees

The more perks a card offers, the higher the annual fee is likely to be. Make sure you are getting enough value out of the card to justify the annual fee.

Cash Advances

Normal credit card purchases have a grace period that means you can pay your bill in full at the end of the month without incurring any interest. Cash advances, however, generate interest on your total credit card balance as of the date of the advance. Cash advances also rarely, if ever, qualify for rewards points.

Canceling Cards

When you cancel a card, don't just cut it up; call the credit card company to cancel it formally and ask that it be removed from your credit report. This will ensure you don't have any "phantom credit" out there that could adversely affect your ability to qualify for a loan or mortgage (or other credit cards).

One Card for Online Purchases

Given that Internet fraud is of concern, I only use one of my credit cards for online purchases. Thus I know my backup card is always "untainted" and ready to go when I need it.

How Many Credit Cards Should You Have?

I like having two credit cards. Both are rewards cards, although I concentrate most of my purchases on one card. The other is a backup (which I use every few months to ensure it stays active). I may occasionally apply for an additional card with great frequent flyer mile benefits or bonuses, depending on the deal at hand.

How many credit cards do you have, and is there a strategy to your choice and use?

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

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Diane

I have too many, for various reasons~ I have 1 rewards card that I use for most purchases, plus 3 general cards. I keep one because it's my oldest card, though it has a low credit limit. There's 1 I use for balance transfers with zero interest (3% transfer fee) if my sons need to borrow money and pay it back. And 1 additional rewards card associated with stores where I shop.

I also have 2 cards for specific stores (Best Buy & Home Depot) that are used only for large purchases with long term no interest offers, when needed.

I generally only use the main rewards card, which is paid off every month. I never carry a balance, unless it's a zero interest offer, which is paid in full before it expires.