How Many Credit Cards Is Too Many?

After a big spending spree you might ask yourself, “Do I have too many credit cards?”

Like most things, the answer isn’t cut and dry. And although having multiple credit cards isn’t necessarily bad, there is such a thing as having too many, especially depending on how you’re using them and which ones you have.

We spoke to several finance experts to find out just how many credit cards you should keep in your wallet, which ones, and how to manage them for the best results. Here’s what they had to say.

How Many Credit Cards Is Too Many?

Ever hear the expression “too much of a good thing?” Well the same can be said for the number of credit cards in your wallet.

Brian Dechesare, founder and CEO of Breaking Into Wall Street explains: “In 2020 the average number of credit cards per adult in America was three, according to an Experian report. While it’s not a bad thing in and of itself to have multiple credit cards, it’s certainly possible to have too many — and it all depends on how well you can manage your credit.”

Although some people might be able to comfortably juggle payments on multiple credit cards (while also making good use of those cash-back and rewards deals), others might be struggling to meet their minimum payments.

Founder and CEO Nate Tsang of WallStreetZen says that most banks expect people to have anywhere from three to five credit cards. “At that amount you can reasonably capitalize on your expenses through perks and rewards points without losing track of what you spend,” he explains.

Rather than wondering how many credit cards is too many, ask yourself how well you’re managing them.

“If you struggle to comfortably pay off one line of credit, then two is definitely too many for you,” says Dechesare. “In general, anything over four is potentially excessive, and anything over six is more than likely too many, even for the most disciplined and organized spender.”

The bottom line isn’t so much how many credit cards you have. It’s more about ensuring you use your credit cards responsibly. One of the best measurements of this? Whether or not you’re paying off the balance every month.

The Risk of Too Many Credit Cards

The biggest piece of advice we heard from our experts was this: No matter how many cards you have, paying them off in full (every month) should be a top priority.

“What matters most is that you’re not overextending yourself by taking on too much debt,” says Jonathan Svensson, co-founder of Almvest. “You should make sure that you’re always paying your bills on time and keeping your credit utilization ratio low, so that you maintain a good credit score.”

Also called your credit utilization rate, your credit utilization ratio is the amount of available credit you’ve used. Credit utilization rates that are too high can negatively impact credit scores.

“The issue is more about utilization than number of cards,” says Freddie Huynh, VP of data optimization with Freedom Financial Network. “Utilization is how much of your available balance you use. Credit score calculations look at utilization in a variety of ways. Overall credit card utilization, the sum of all credit card balances divided by the sum of all credit limits, is the most common.”

But Huynh cautions that there’s also another way banks and credit bureaus can calculate your utilization — and that’s by looking at the greatest credit utilization on an individual card. Say you’re consistently using 40% of your available credit on one card and 70% on another. In this case a bank might only care about that 70%. As a rule, anything over 30% is seen as a red flag by banks.

“If you use less than 10% on each card and are diligent in paying your bills on time each month, then you can improve your credit score,” says Anthony Martin, CEO and founder of Choice Mutual. “But if you surpass 30%, your credit utilization ratio will be too high — and if you mix that with missed payments, it can significantly harm your score.”

Which Kinds of Credit Card Accounts Should You Have?

Now that you know a bit about how to maintain your collection of credit cards, let’s chat about the types of accounts and credit card issuers you have in the mix.

Although store cards are often a popular choice (who doesn’t want those extra deals at their favorite store?) you’ll want to be sure you’re getting a worthwhile deal before opening one.

“I usually avoid store credit cards because their interest rates tend to be high,” says Svensson. “They’re also limiting because they can only be used at that one store.”

Other things you’ll want to check before opting in for a new card include the annual fee, rules surrounding rewards and cash back, and any additional perks. There are a lot of great rewards cards out there that will help you earn cash or points on certain purchases (like gas) or on more generic purchases. As for those additional “perks” associated with store cards: keep in mind that many are in fact available without the card.

When deciding what cards deserve a spot in your wallet, it’s helpful to start by looking at your spending. Would you be more likely to use your card to shop at one particular store or to fill your tank with gas? If it’s gas, then maybe the store card isn’t for you.

Pick your cards based on your spending habits and you’ll be sure to have the best rewards in your wallet, as well.

The same rule of thumb can apply if you feel you have too many credit cards and want to winnow them down. Just be sure to follow these precautions whenever you cancel credit cards.

The Bottom Line on Credit Card Accounts: Choose Wisely

In order to get the most out of your credit cards you’ll want to take the time to carefully pick the best rewards cards and make a plan for using them wisely.

When in doubt, start small with just one or two credit card accounts until you get the hang of paying them and making use of those rewards. Then you’ll be able to iterate on your spending plan and find the perfect balance of credit cards for your lifestyle.

Contributor Larissa Runkle frequently writes on finance, real estate, and lifestyle topics for The Penny Hoarder.

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