How many credit cards should I have? Experts share their tips

This content is sponsored by PenFed Credit Union, federally insured by NCUA.

There are so many different credit card options – so how many should you have in your wallet? And what are the benefits of having multiple credit cards?

The average American has 3.06 credit cards, according to Wallet Hub, although that number can certainly fluctuate based on factors like age, credit score, income and debt. Determining the right number for you depends a lot on your lifestyle as well as your goals, the experts at PenFed Credit Union note.

It’s a good idea to have multiple credit cards, generally speaking. Using multiple credit cards can offer you back-up payment methods, different savings or rewards, a more diversified credit report, and help you manage cash flow more efficiently, PenFed Credit Union says.

“What matters most with credit cards is how you manage them – whether you make full, on time payments consistently,” PenFed Credit Union experts said, adding that there’s no legal limit on the number of credit cards you can have.

Multiple credit cards can sometimes help your credit score by increasing the available credit you have and giving you more lines of credit. Understand that multiple credit cards can hurt your credit score, too. For example, opening too many accounts too quickly or not making regular payments on the cards can drop your score.

Using multiple credit cards can create a bigger credit file, which helps build your credit. Credit bureaus often recommend people carry five or more lines of credit — not all of them being credit cards. But each month when payment information comes in from each credit card or loan that you pay on, you are building a payment history that benefits you, PenFed notes.

Having multiple credit cards raises your total amount of available credit and keeps your credit utilization low as well. Credit utilization is the percent of your credit that you are using.

“Lower credit utilization raises your credit score,” PenFed’s experts said. “In fact, people with the highest credit scores typically use less than 10% of their available credit.”

Using more than one credit card can help you get the best terms for every transaction. It means you can get the best rewards and every purchase category that you need.

“For instance, you might have a cashback rewards card for every day shopping and travel rewards card for family vacations,” PenFed’s experts noted.

Ever been in a situation where you debit or credit cards are lost, compromised, frozen or stolen? Having multiple credit cards means that if you’re unable to use one card, there are back up options readily available.

Multiple credit cards can also make certain purchases more convenient. There are some businesses that only accept certain credit cards, and by having two or more cards from different networks, you’ll have a way to pay anywhere, PenFed‘s experts pointed out.

So how many credit cards is the right number for you?

The experts at PenFed Credit Union recommend considering your spending habits first. For example, do you pay for things with debit cards or credit cards? If you prefer to charge all of your expenses and pay off your credit card at the end of the month, then you may need more credit cards to spread out your expenses and get the best rewards.

If you were looking to build your credit score, be mindful about your debt, PenFed said.

“You might think another credit card is the right option, but there are other ways to build credit that may be a better fit for your situation,” PenFed said. (Read more about some of those options here.)

While credit cards can help cover emergencies, it’s important to be careful turning to credit cards all the time for those types of events. Credit card interest and fees can make emergencies more expensive in the long run. It may be better to turn to an emergency fund for those situations or research if your credit card offers a 0% balance transfer for 12 months or more which could offset an unexpected expense.

The number of credit cards you have can be an important step in your journey toward financial wellness, the experts at PenFed Credit Union said.

“If you’ve decided it’s time to add another credit card to your wallet, the good news is there are lots of great options out there to help you build your credit, max out rewards, and reach your most important financial goals,” PenFed said.

Read more on PenFed Credit Union’s website about everything you need to know about how many credit cards are best for you. PenFed Credit Union is federally insured by NCUA.

 

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