How Many Credit Cards Is Good to Have

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Find The Best Credit Cards For 2021

No single credit card is the best option for every family, every purchase or every budget. We've picked the best credit cards in a way designed to be the most helpful to the widest variety of readers.

How many and what type of credit cards should you have? The answer is not only different for each person, but it's also likely to evolve—with finances, spending, knowledge and the credit offers available.

Is it good to have multiple credit cards?

Any benefit achieved with multiple credit cards ultimately depends on the cardholder and how financially responsible he or she is. According to Experian, Millennials have an average of 2.5 cards each, while Baby Boomers average 3.5.

Some prefer to live without a credit card as a means of avoiding temptation to spend money they don't have. Others can do very well with a single card that pays cash back or maybe two cards—one for everyday spending and one for eating out or for traveling abroad.

Some people (*cough* our entire staff *cough*) make a hobby out of maximizing credit card rewards—particularly travel rewards. Travel rewards allow for nearly free flights and luxury hotel stays. There are many routes to take with credit card ownership, but it's up to cardholders to decide how many credit cards they need or want.

Ideally, how many credit cards should you have?

Ultimately the number of cards someone should have depends entirely on personal situation and financial history. Some remain fine with one (or even zero) and others can thrive with a handful.

But first, a necessary disclaimer: It's important to pay off the full balance on every card every month. Having several cards is a lot of responsibility. Don't collect more than one or two cards if it's not possible to pay off every balance monthly, resist temptations to spend more just because more credit is extended.

It's also important to open credit card accounts slowly over several years. Opening multiple card accounts in a short period of time can hurt a credit score or jeopardize larger financial goals like getting a low mortgage rate when buying a house. Closing card accounts can also hurt credit scores if it means the cardholder's credit optimization rate will increase. Be selective when building a credit card portfolio.

Live Without a Credit Card

Before choosing to apply for any credit card, remember the option exists to not own one at all. Using only cash or a debit card associated with a checking account works well for 20% of American adults who don't have any credit cards. It's possible to survive and thrive without a credit card.

Sticking to cash, the only money available to spend is money on-hand or saved. For some, that's an effective form of budget discipline. Adding a debit card to the mix offers convenience and allows online purchases.

One downside to living without a credit card is the limited rewards potential. A few bank accounts do offer debit cards that earn rewards for purchases but they're few and far between. Additionally, debit cards and cash don't offer the same kinds of purchase and fraud protection that's afforded by credit cards. And some services, such as car rental, are very difficult to obtain with only a debit card.

Living without a credit card will make building up a credit score more difficult. This can make it harder to make big financial moves like taking out a mortgage. There are other ways to build up a credit score, like timely payments of student and car loans. Building credit should never be the sole justification for taking on debt. Still, for those without other loans, a credit card paid in full each month can help build credit to buy a home down the road.

Get a Single Cash Back Card

Starting out, we recommend a first credit card one that has no annual fee and pays cash back rewards on every purchase. For instance, the Discover it® Cash Back card offers 5% cash back on everyday purchases at different places each quarter up to a quarterly maximum of $1,500 in spending when activated. Plus, earn unlimited 1% cash back on all other purchases – automatically. This provides a great opportunity to learn the ins and outs of credit card rewards. Even if the credit line is not much to start, it may be enough to cover major expenses each month.

Cardholders may also consider a card that uses the Visa or MasterCard network, which are accepted by more retailers, especially abroad, than Discover. Top picks include the Citi® Double Cash Card, Chase Freedom Flex℠, Chase Freedom Unlimited® and Capital One Quicksilver Cash Rewards Credit Card.

Students applying for a first credit card who don't have much income or credit history should read about the best student credit cards available.

Citi® Double Cash Card

Up to 2% Reward Rate

First, you earn 1% unlimited cash back on every purchase you make. Then, as you pay for those purchases, youRead More

Regular APR

13.99% - 23.99% (Variable)

Credit Score

Excellent, Good (700 - 749)

Why We Picked It

The Citi Double Cash card's simple cash back structure and long lasting APR offer make the Citi Double Cash a favorite among those who want to set it and forget it. It offers a solid cashback rate on all purchases, plus a long-lasting 0% intro APR offer, all without an annual fee.

Pros & Cons

• Earn up to 2% cash back—1% when the purchase is made and 1% when payment is made on the account
• No cash back cap—no limit on the amount of cash back that can be earned
• No annual fee
• Introductory APR period for balance transfers

• Foreign transaction fee
• Balance transfer fee
• Lack of benefits seen in other no annual fee cards
• No introductory 0% APR on purchases

Card Details

• Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.
• To earn cash back, pay at least the minimum due on time.
• Balance Transfer Only Offer: 0% intro APR on Balance Transfers for 18 months. After that, the variable APR will be 13.99% – 23.99%, based on your creditworthiness.
• Balance Transfers do not earn cash back. Intro APR does not apply to purchases.
• If you transfer a balance, interest will be charged on your purchases unless you pay your entire balance (including balance transfers) by the due date each month.
• There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).
• The standard variable APR for Citi Flex Plan is 13.99% – 23.99% based on your creditworthiness. Citi Flex Plan offers are made available at Citi's discretion.

Add Multiple No-Annual-Fee Cards Based on Where You Spend

Building from the first credit card, the next step is to add cards that offer extra rewards for the places where cardholders spend the most. Focus on cards with no annual fees.

Consider credit cards that reward the most for grocery shopping. The Blue Cash Everyday® Card from American Express (Terms apply. See rates and fees.) offers 3% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%), 2% cash back at U.S. gas stations and at select U.S. department stores and 1% cash back on other purchases. Cash back is received in the form of Reward Dollars that can be easily redeemed for statement credits.  Another option is to apply for a card with a primary bank that offers a single-rate earning cash back rewards card.

Having multiple cash back cards may be excessive, but ultimately it's up to the cardholder and his or her patience. Remember that canceling a credit card early on while building credit history could damage a credit score. Reducing credit lines may mean an increase in the credit utilization rate, which also can reduce a score.

Depending on your lifestyle, there may be different options for a second card beside ones that offer cash back rewards. Consider a card that pays the cardholder in miles that can be redeemed for travel expenses. The Bank of America® Travel Rewards credit card credit card and the Discover it® Miles card are examples of these types of cards. Both cards are single-rate earning cards that allow you to redeem miles as credits to eligible travel expenses (i.e. 2,500 miles = $25 travel credit). Check to make sure that any travel-based credit card also offers no foreign transaction fees.

Specific retailer credit cards may also be beneficial. These types of credit cards offer benefits and rewards tied to a specific retailer a cardholder frequents—or is about to spend a lot of money with in the near future. Many of these cards are only accepted by the named retailer. Need a new work wardrobe? Look at a Macy's branded card. Similarly, Nordstrom, Home Depot, Best Buy and Amazon all offer their own credit cards with unique benefits. (Amazon also offers a number of cards that offer increased rewards on their brands.) The Target RedCard™ Credit Card* offers 5% off Target in store or online purchases, free shipping for online orders and a $0 annual fee.

Pay Annual Fees for Cards With Better Rewards

Sometimes specific rewards may justify paying an annual credit card fee. Consider loyalty to specific brands beyond a specific retailer, since most retailer cards don't require an annual fee.

The key brands here involve travel. If someone stays most often at Marriott hotel properties or flies American Airlines, he or she may choose to apply for a Marriott Bonvoy or an AAdvantage-branded credit card. Most of these brand-loyal credit cards charge an annual fee. Try to pick the credit card that offers the most likely-to-be-used benefits in excess of the annual fee.

Consider these travel brand-specific credit cards: United℠ Explorer Card, World of Hyatt Credit Card* and Alaska Airlines Visa Signature® credit card*. All of these cards charge an annual fee. Each of these cards represents a specific brand loyalty for travelers. For example, the World of Hyatt card offers a free night's stay annually at one of Hyatt's lower-tiered hotels. That $95 annual fee beats room rates that could be as high as $399.

When it comes to airlines, there are various benefits when choosing an airline-specific card. For example, the Alaska Airlines card offers convenient flights across the U.S. It's easier to achieve a preferred status on Alaska Airlines than with United Airlines, which often flies the same routes. Plus, the Alaska Airlines card offers an annual companion fare certificate that allows cardholders to take a companion anywhere for $121 ($99 fare plus taxes and fees from $22). Add in the $75 annual fee for the Alaska Airlines Visa card and cardholders are basically getting an airline ticket of any value for a companion for about $200. In other words: It more than pays for itself, as long as it's used.

Beside travel rewards, there are some credit cards with annual fees that offer rewards on grocery and gas spending. The Blue Cash Preferred® Card from American Express (Terms apply. See rates and fees)  provides strong rewards in these categories: 6% cash back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%), 6% cash back on select U.S. streaming subscriptions, 3% cash back at U.S. gas stations and on transit (including taxis/rideshare, parking, tolls, trains, buses and more) and 1% cash back on other eligible purchases. Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit. These high earning rates come with a $0 introductory annual fee for the first year, then $95. annual fee. Compare this to the 3% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%), 2% cash back at U.S. gas stations and at select U.S. department stores and 1% cash back on other purchases. Cash back is received in the form of Reward Dollars that can be easily redeemed for statement credits earned with the no-annual-fee version of the card i.e Blue Cash Everyday (Terms apply. See rates & fees).

The key for any cardholder is to identify his or her own behaviors that can provide an opportunity for greater rewards—before shelling out an annual fee.

Pursue Big Rewards and Welcome Bonuses

Pursuing big rewards and welcome bonuses can sometimes pay off, but it's a risky game that not everyone can play wisely. Big rewards often accompany much higher annual fees and high credit limits are a tempting opportunity to spend more than necessary.

The clearest example of a big rewards credit card that could pay off for the right cardholder is the Chase Sapphire Reserve®. For its hefty $550 annual fee, cardholders get a $300 credit towards travel purchases paid for with the card each year, Priority Pass airport lounge access, primary car rental insurance when they pay for their rental with their card, premium trip insurance, Visa Infinite privileges and 50% more points value when redeeming points for travel in Chase Ultimate Rewards® portal or through the Pay Yourself Back feature. Another popular credit card for those playing in the high end is The Platinum Card® from American Express. Similar to the Chase Sapphire Reserve, The Platinum Card has a hefty annual fee of $695 (Terms Apply. See rates and fees) and hefty benefits, including a large welcome bonus.

Be careful not to make a high-fee super-premium card your sole credit card. It's best to pair one of these cards with a no-annual-fee card so cardholders can drop the high fee card if anything changes.

The Platinum Card® from American Express

Apply Now

On American Express's Secure Website

Apply Now

On American Express's Secure Website

5X Reward Rate

Earn 5 Membership Rewards points per dollar on prepaid hotels booked with American Express Travel; earn 5 Membership Rewards perRead More

Welcome Bonus

100,000 Membership Rewards® Points

Regular APR

See Pay Over Time APR

Credit Score

Excellent/Good (700 - 749)

Why We Picked It

The Platinum Card is destined for frequent travelers who intend to fully leverage the rich set of luxury travel benefits and Platinum Concierge service. In the right hands, the classic status card's staggering annual fee is well justified.

Pros & Cons

• High reward potential on flights and hotels booked through American Express Travel
• Multiple credits can help justify the fee
• Comprehensive airport lounge access
• Luxury travel benefits and elite status with Hilton and Marriott with enrollment

• High annual fee
• Maximizing the statement credits takes some work and could be unworkable for many
• Reward rate outside of travel is sub-par for a premium card

Card Details

• Earn 100,000 Membership Rewards® Points after you spend $6,000 on purchases on the Card in your first 6 months of Card Membership.
• Plus, earn 10x points on eligible purchases on the Card at restaurants worldwide and when you Shop Small in the U.S., on up to $25,000 in combined purchases, during your first 6 months of Card Membership.
• Earn 5X Membership Rewards® Points for flights booked directly with airlines or with American Express Travel up to $500,000 on these purchases per calendar year and earn 5X Membership Rewards® Points on prepaid hotels booked with American Express Travel.
• $200 Hotel Credit: Get $200 back in statement credits each year on prepaid Fine Hotels + Resorts® or The Hotel Collection bookings with American Express Travel when you pay with your Platinum Card®.
• $240 Digital Entertainment Credit: Get up to $20 in statement credits each month when you pay for eligible purchases with the Platinum Card® at your choice of one or more of the following providers: Peacock, Audible, SiriusXM, and The New York Times. Enrollment required.
• $155 Walmart+ Credit: Cover the cost of a $12.95 monthly Walmart+ membership with a statement credit after you pay for Walmart+ each month with your Platinum Card. Cost includes $12.95 plus applicable local sales tax.
• American Express has expanded The Centurion® Network to include 40+ Centurion Lounge and Studio locations worldwide. Now there are even more places your Platinum Card® can get you complimentary entry and exclusive perks.
• $200 Airline Fee Credit: Get up to $200 in statement credits per calendar year in baggage fees and more at one select qualifying airline.
• $200 Uber Cash: Enjoy Uber VIP status and up to $200 in Uber savings on rides or eats orders in the US annually. Uber Cash and Uber VIP status is available to Basic Card Member only.
• $300 Equinox Credit: Get up to $25 back each month on select Equinox memberships when you pay with your Platinum Card®. Enrollment required.
• $179 CLEAR® Credit: Use your Card and get up to $179 back per year on your CLEAR® membership.
• $695 annual fee.
• Terms Apply.
• See Rates & Fees

How many credit cards is too many?

The key is to not overextend by signing up for too many credit cards at once.

Some people happily acquire credit cards solely for welcome bonuses and then cancel the card—often before the annual fee charge arrives after one year. This is known as "churning-and-burning." Aside from the difficulty of keeping track of all this activity, there's the possibility it can affect your credit score. It's a dangerous strategy if the cardholder intends to go into the market soon for a major purchase like a house. There's also the possibility that even if their credit score remains solid, a cardholder can be denied by a bank for a new card because they've opened too many accounts in the past year or two.

Before signing up for too many cards, consider what each card can offer (say, no foreign transaction fees, travel rewards or cash back on groceries or gas). Weigh the available bonuses against any card already in possession before making a decision. But don't be lured into opening too many benefit-duplicative credit cards simply for the bonuses.

Different Cards, Different Benefits

It's important for credit card owners to understand which strategy might suit them best and how to avoid making rookie mistakes. When getting ready to sign up for a first credit card, instead of grabbing the first offer advertised, do some research. For example, for student credit cards, check out the details of the non-student version of that card that the cardholder can graduate to and compare it to other options available to working adults.

As cardholders start to build a portfolio, they should consider how each card's benefits can improve life in different ways (and increase a credit score). Having a solid credit line, along with a low credit utilization rate, will help people take out larger loans with low interest rates when purchasing a car or a house later in life.

Potential Issues With Having a Lot of Credit Cards

As mentioned above, signing up for a lot of cards at once in a short period of time could hurt your credit score. It's risky business to grab bonus after bonus and spend more than normal to get it.

It can also be difficult to manage payments for so many credit cards at once. If someone signs up for six different cards all through different credit card companies, then that's six different mobile apps or websites that need to be checked regularly to make on-time payments. Each card will also likely have a different payment due date. That's a lot to keep track of.

If cardholders don't pay off all their monthly balances on time, then they're not only looking at late fees and spiraling debt, but also a growing credit utilization rate that will most likely lead to a decrease in credit score. This could hurt down the line when they're ready to finally buy that house or car.

Bottom Line

Remember, many people carry just one credit card. They have had one card for years, maintain excellent credit and earn substantial cash back rewards without having to worry about which card they'll pull out and take with them on any given shopping trip or vacation.

On the other hand, some folks successfully operate by pursuing big rewards and "churning-and-burning." They continue to open new cards to chase bonuses or to capture the most deluxe travel rewards. This, of course, involves risk. There's the risk of paying a high annual fee that doesn't make sense given spending and lifestyle. There's the risk of overspending just to earn rewards (or justify a fee). And there's the risk that all that credit card churning will hurt when applying for additional credit products, such as a mortgage.

Whatever future cardholders decide about how many cards to own, follow these three rules:

Use credit cards whenever possible, making sure a reward is received.
Don't buy anything with a credit card that wouldn't normally be bought with cash.
Make sure to pay off every credit card balance in full every month.

To view rates and fees for Blue Cash Preferred® Card from American Express please visit this page.
To view rates and fees for Blue Cash Everyday® Card from American Express please visit this page.
To view rates and fees for The Platinum Card® from American Express please visit this page.

Find The Best Credit Cards For 2021

No single credit card is the best option for every family, every purchase or every budget. We've picked the best credit cards in a way designed to be the most helpful to the widest variety of readers.

How Many Credit Cards Is Good to Have

Source: https://www.forbes.com/advisor/credit-cards/how-many-credit-cards-should-you-have/

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