For some people, the answer to the question “How many credit cards should I have?” is zero. People who have gone overboard with credit card spending and hurt their credit may need to stick with cash to avoid overspending. However, for the typical consumer, two to five credit cards is ideal.
While life may seem simpler if you only have one credit card, it’s smart to have a backup credit card, even if you don’t use it. If you only have one credit card and it’s stolen, you’ll have to do without until you obtain a replacement. Or, suppose you’re on vacation and an unexpected expense comes up, like a car repair or a medical expense. Having a backup credit card can keep you from going over your credit limit on your main card.
Those who say you should have three to five credit cards reason that having one or two cards maxed out is harder on your credit score than having, say, four cards, each of which only carries a balance of a fraction of the credit limit. One factor in calculating credit scores is your credit utilization rate. If you only use a small fraction of the credit available to you, your credit score will improve, because it shows you are responsible about your credit.
Generally speaking, operating at either extreme, whether it’s having no credit cards or having 20 cards will be hard on your credit score. Credit bureaus examine the mix of different types of credit you have. They prefer that you have several different types of credit, such as a mortgage, car loan, and revolving credit (which is what credit card debt is) rather than just one type of credit. But having too many cards hurts your credit score, because you pose a higher risk of getting into too much debt.
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