How Many Credit Cards Should I Have? Best Practices for Credit Cards

There’s no perfect answer like so many other things in life because personal finance is personal. However, you can use some essential criteria as a guide.

Credit Card Pros Credit cards come with some advantages that benefit owners. When used responsibly, credit cards make life easier and maximize your dollars.

1) To build credit. There’s no arguing that money is essential. Credit extends your purchasing power for a home mortgage, to invest in a business, and to finance an auto loan. 

2) To earn rewards. Nobody wants to spend more than they have to. So credit card companies may offer cashback or points on your everyday purchases to save you money with little effort. 

3) Convenience. Credit cards are easy to use and more convenient than cash. They take up less space in your wallet and allow you to keep more money in a high-interest savings account longer.

Credit Card Cons 1) The potential to overspend is real. It’s easy to spend more than you intend when using a credit card versus cash–and there’s a science to prove it.

2) It’s expensive if you don’t pay off the balance every month. Credit cards have high-interest rates that can take years to pay off when only paying the minimum balance.

3) It can hurt your credit if you miss a payment. Just like credit cards can help your credit score, they can damage it.

How Many Credit Cards Should I Have? A magic formula to calculate the number of credit cards you need doesn’t exist. There are many pros and cons.

There’s no punishment for not having or using a credit card. However, credit cards can help build credit. It’s hard for banks to give you a loan when you haven’t shown that you can pay the money back.

We don’t have a perfect number of credit cards to have. So, we don’t know how many are too many. But, we know too many isn’t a good idea.

Here’s a list of good credit card habits to build: 1) Use a budget. 2) Pay the monthly balance before the due date. 3) Check your credit score regularly. 4) Maintain a low utilization rate.

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