OnPath Credit Union

Ideally, How Many Credit Cards Should You Have?

Credit cards are a convenient form of payment that offers various benefits. When used responsibly, it can be a powerful tool that helps you take charge of your finances, build your credit score, and increase your purchasing power.

Because of these advantages, many people consider getting multiple personal cards. But that can be risky. This begs the question: how many credit cards should you have? The answer depends on several factors, including the following:

Your Finances

When deciding on the number of cards you should have, your finances should be the first thing you consider. By taking a long, hard look at your spending habits and your ability to pay all of your bills on time, you can determine whether you are ready to manage multiple credit cards.

Your Credit Utilization Ratio

Your credit utilization ratio refers to the portion of your credit limit that you use. This ratio accounts for a third of your overall credit score. To maximize your score, you are advised to keep your balances below 30% of the credit extended to you by your financial institution.

Getting additional cards increases your overall line of credit, which can decrease your overall credit utilization. However, you should take note that applying for a new card requires a hard credit inquiry, which will temporarily decrease your score.

The Type of Card

Not all credit card providers are alike—the benefits they offer may differ. For example, you may have a card that offers a flat 1% cash back on all purchases throughout the year, and another one that offers a higher cashback rate on certain categories during certain months. You can maximize the rewards you can get by using your personal credit cards wisely.

The Bottomline

There is no one number of cards that is ideal for everyone because every individual’s financial situation varies. While some people can make the best out of multiple credit cards, others are fine with just having one. If you want some advice on how many cards you need, OnPath Federal Credit Union is more than happy to help you. To get started, apply online today.