The question of "how many credit cards is too many" is not as easy to answer as you might think, and it can be a different number for different people. In terms of credit scoring, the number of credit cards you have plays a secondary role to other factors, so the question is more about personal needs and how many accounts you can reasonably keep track of.
The number of credit cards you have plays a minor role in your credit score
To understand how the number of credit cards you have could possibly affect your credit score, you need to understand how credit scoring works. By far, the most popular credit scoring model lenders use is the FICO score, and it's made up of information from five categories.
- Payment history (35%).
- Amounts owed (30%).
- Length of credit history (15%).
- Types of credit used (10%).
- New credit (10%).
Now, as far as the largest category, payment history, is concerned, the number of cards you have doesn't play much of a role in your score, as long as you make your payments on time.
On the other hand, the "types of credit used" category primarily focuses on whether you have a mix of account types (mortgage, auto, credit card, and so on), but it also includes the total number of credit accounts on your report. However, how these factor in depends on your overall credit profile, so it's difficult to say how this category is affected.
The second-largest category is "amounts owed," which mainly considers how much you owe on your accounts relative to your credit limits. In this way, having more credit cards could potentially help your score, as long as your overall balance remains constant. This category takes into account factors such as how many of your accounts have balances, and the balances on specific accounts. So if you have a lot of credit cards and carry balances on all of them, it could be detrimental to your score, but if all but one or two account have zero balances, it could help you.
Finally, the "length of credit history" and "new credit" categories could be adversely affected if you open several new credit cards within a short period of time. However, the former takes into account the average age of your accounts, so if you have a lot of credit cards that have been open for a long time, it could potentially help this category as well and reduce the impact of additional new accounts on your credit score.
To sum up, very little of your credit score is derived from the actual number of open accounts you have. Rather, the age and usage of those accounts is the most important factor.
When trying to figure out how many credit cards is too many for you, there are some things you should consider, other than how it might affect your credit score.
First off, you'll have to keep track of and manage each and every credit card account, and this can be a real chore with a lot of credit cards. With a dozen or so credit cards, it can be easy to forget about one and end up with a late payment.
Or if you're prone to impulse buying or shopping sprees, it could be a good reason to limit the amount of credit cards in your wallet. After all, do you really trust yourself with $100,000 in combined credit limits?
On a positive note, different credit cards make sense for different types of purchases. For example, some store credit cards offer rewards rates that general credit cards simply can't match. Some cards provide extra incentives on certain types of purchases, while others may offer low interest for a certain amount of time. In fact, I have different credit cards I use to book airplane tickets, put gas in my car, and shop at a few of my favorite retailers.
So how many is right for you?
The right number of cards for you depends on how much you feel you need and can handle. For me, the magic number is seven (including store cards), but I rarely use some of them. Some people may be completely capable of managing a dozen or more credit card accounts, and in fact I have a friend with 37 open credit card accounts and a fantastic credit score because he uses all of them responsibly. Others may get by just fine with a single credit card. As long as you feel comfortable with the amount of credit cards you have and you use them responsibly, you don't have too many -- although you should re-evaluate periodically.