How Many Credit Cards Should I Have?
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How Many Credit Cards Should I Have?
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How Many Credit Cards Should I Have?

It really depends! Your lifestyle, ambitions, financial standing, and financial discipline play an important role in deciding the number of credit cards you can and should have.

A better question to ask would be “How many credit cards do I need?”, because, if you are financially irresponsible, it is better for you to have none.  

That said, there isn’t a specific number of credit cards you should have. A high number of credit cards can actually boost your credit score but having multiple credit cards can be risky too. It’s a little tricky. So, here’s what you need to know.

What is a Credit Card?

A credit card is a financial tool that allows you to borrow money to buy things. A credit card is no free money; you need to pay fees and interest for borrowing that money. Using your credit card may help you earn rewards and also build your credit.

How to get a Credit Card?

You need to choose the credit card you wish to apply for. Apply and submit your documents. If you meet the eligibility criteria of the bank, you will get a credit card, which you need to activate to use.

What can I use my Credit Card For?

You can use your credit card to pay for any purchases wherever they are accepted.

You can shop online; all you have to do is enter your credit card details just as you would do with your debit card. You can swipe credit cards at shops and retail stores, book air tickets and pay at hotels.

The number of credit cards you possess should fit your circumstances.

So, let’s go back to the same question, how many credit cards can I have?

1. Well, if you are new to a credit card, start with just one

Learn how it works and start building your credit. Your first credit card needn’t be a rewards credit card, but you may qualify for most cards if you are diligent with your payments.

Once you get a hang of using a credit card and making payments consistently and on-time, you can then think of applying for more. That is if you need more.

Why do I need a credit card?

You need to have a credit card because of these 2 primary reasons:

  • Credit cards offer convenience, rewards, protections, and benefits.
  • Credit cards improve your credit score.

Since you are new to a credit card, it is important that you exercise self-control. It is easy to get carried away with money you cannot see. If you don’t use your credit card responsibly, it’ll be more of a curse than a blessing.

Two great pieces of advice for you:

  • Don’t buy things you normally wouldn’t buy.
  • Set up auto pay to pay the full outstanding balance on your credit card.  

2. If you have the experience of using credit cards, the right number is whatever makes perfect sense to you.

Each credit card you own may have been taken with a purpose in mind. A cashback card for everyday shopping – one for travel expenses and another for new balance transfer. With the right type of credit cards, you can use their benefits to their fullest potential.

On the other hand…

If having too many credit cards overwhelms you – that you are spending more than you can afford, then it’s probably best to restrict yourself to just one or two credit cards.

Don’t close your credit cards if you are not using them.

That’s the worst thing you could do to hurt your credit score.

Closing older credit cards shortens your credit history. Since the account is closed, your payment history doesn’t reflect in your credit report. That can hurt your credit score.

Also, closing credit card accounts reduces the available credit. The credit availability is important when you need to maintain a healthy debt-to-credit ratio. Therefore, it’s always better to leave your credit cards open even if you are not using them anymore.

How many credit cards should I have for good credit or to improve my credit score?

There is no magic number. You just need to use your credit wisely. Some tips on using credit cards to improve your credit score:

  • Keep your outstanding balances low and try to pay off your debt in full each month.
  • Apply for new lines of credit or credit card not more than once in every six months.
  • Choose cards that are beneficial to you, such as a lower interest rate or a better rewards program.

More credit cards give you access to higher credit limits and better debt utilization. How?

Let’s find out.

Every new credit card you add increases your total credit limit and decreases your debt-to-credit ratio (as long as you don’t add more debt). For Instance, if you owe Rs. 15,000 on one credit card with Rs. 80,000 limit and open a new credit card with another Rs. 50,000 limit, your overall credit utilization is 11% (Rs.15,000 out of Rs.1,30,000), which is a healthy debt-to-credit ratio.

Instead of applying for another credit card, you can also ask your bank to increase your credit limit. It has the same effect on the credit score. But if your need for a new credit card is because of the benefits it offers such as rewards, cashback, etc. applying for a new card then makes sense.

As long as you have a long credit history reflecting an excellent credit score, creating new accounts may have minimal impact on your score.

Having more than two or three credit cards can spread the balance you have on the credit cards to decrease your debt-to-credit ratio and protect your credit score.

The Bottom Line

Having a lot of credit cards can improve or hurt your credit score, depending on how you use them. 

Why more credit cards are good?  

  • You can get a low-interest rate 
  • You can transfer a balance to a 0% interest credit card
  • You can earn rewards and perks 
  • You can decrease your debt-to-credit ratio by increasing more credit

MoneyTap’s credit card works hard for you just like any other credit card, maybe a little harder. There’s no limit to the benefits and flexibility MoneyTap Credit Card 2.0 provides. Get MoneyTap today!  

Shiv Nanda

Shiv Nanda

Shiv Nanda is a financial analyst at MoneyTap who loves to write on various financial topics online. He also advises people on financial planning, investment choices and budgeting skills, and helps them make their financial lives better.

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