This article was updated on June 23, 2018.
Every month, Americans collectively make billions of credit card transactions, and that number is climbing rapidly. Credit cards are more secure than cash, they offer rewards for using them, and they allow you forego payment for a few extra days (or months).
But how many credit cards should you have as a consumer? The average American has two or three different cards in their wallet. Should you, too?
How many credit cards should I have?
The answer to that question will vary from person to person. Answering the following questions will help you get a better idea of how many credit cards you should have in your wallet.
How well can you manage multiple accounts? Multiple credit cards means multiple accounts. You'll want to ensure you can pay each balance off every month to avoid late fees and high interest charges. You'll also need to be organized enough that you can maximize the rewards categories (groceries, travel, etc.) for each card. If you're not willing to keep things organized, you may do best with just one or two credit cards.
How do you spend most of your money? If you spend a lot of money in one specific category, like travel, you may consider adding a credit card to use just for that type of spending. In fact, most category-specific rewards cards come with a signup bonus that will help offset your spending in that area.
What kind of benefits do you want from a credit card? If you're carrying a balance on a credit card already and looking for some relief, applying for a 0% interest credit card could help. If you're looking to maximize rewards and other benefits like primary rental car insurance or extended warranties on electronics, you may need a wide range of credit cards to fulfill every need.
How many credit cards are too many?
If you have so many cards at so many different banks that you can't keep track of all of your accounts, you probably have too many. Too many accounts could lead to missed payments, resulting in interest, late fees, and piling up credit card debt at a high interest rate.
But there's no limit to the number of credit cards you can have. Some banks may deny you another credit card for having too many recent inquiries on your credit report, or if the bank has already extended you what they deem "sufficient credit." Additionally, banks may shut down your credit card account if you don't use it, so make sure you can keep all of your accounts active by putting a nominal charge on them every once in awhile.
In fact, more credit cards could help boost your FICO score as long as you don't let the credit limit impact your spending. Each new credit card adds new available credit, so as long as your spending stays the same, your credit utilization rate should go down. Credit utilization is the amount of debt you carry divided by your available credit limit. It's a major factor in determining your FICO score.
What credit card should I get?
The credit card for you will depend, again, on answering the three questions above. Overall, credit cards can be divided into two main rewards categories: cash back and travel. Cash-back cards, as the name implies, reward cardholders with cash every time they use the card. Travel credit cards provide points, which can be redeemed for travel specific purchases.
Pay attention to the ongoing benefits of each card you're considering. Banks also provide special credit card offers, bonus points, or cash back for meeting certain spending thresholds in the first few months of using a new card. Those sign-up bonuses could help you decide between two or more similar cards.
So, go ahead and sign up for as many or as few credit cards as you want. Just make sure you can manage all the accounts you have -- whether it's one or 10 -- and don't use credit cards as a crutch to support unsustainable spending. There's really only one person that can answer "how many credit cards should you have?" That's you.