Financial Education


How Many Credit Cards Should I Have?

Tracy Curtis / March 22nd, 2018

If you’re trying to build credit or boost your credit score you might be wondering if there is an ideal number of credit cards to have. The truth is there is no perfect number. However, there are factors you should keep in mind when deciding how many credit cards to have.

Your credit score is calculated by looking at five categories, each with varying levels of importance: your payment history (35%), credit utilization (30%), the length of your credit history (15%), new credit (10%), and type of credit used (10%). The first two categories carry the most weight, so focus on getting those percentages as low as possible.

Since payment history makes up 35% of your credit score, make sure you always pay your bills on time. That can be a challenge if you have multiple credit cards with different due dates. To ensure you pay all your bills on time, set alarms or schedule payments so that each one arrives before the due date.

Your credit utilization ratio shows how much of the total available credit you’ve used. To figure out your utilization ratio, first add the balance on all your credit cards. Next add the total amount of credit you have. Then divide your total balance by the total credit. Multiply that by 100 and you have your ratio. To improve your credit score, try to keep that ratio under 30%.

Using multiple cards can also make it harder to keep track of how much you’re spending. Set balance alerts on your cards so you don’t exceed a specified percentage of the card’s available credit.

Rewards cards, which either give you cash back, points for merchandise, or airline miles, generally have higher APRs than other cards, so if you can’t pay the balance on these cards in full every month, it’s best to keep just one or none at all.

If you’re a full-time student thinking of getting your first credit card, shop around for a card with low interest and no annual fee. Be disciplined and use the card for emergencies only. Then always pay your bill on time. 

Some cards offer initial low rates if you transfer your balance from another card.  If you do that, leave the older cards unused and pay off the balance on the newer card quickly. The cards with no balances help keep your utilization ratio low. 

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