5 Serious Risks of Only Having 1 Credit Card

Nearly a third (30%) of Americans have a single credit card, according to a survey last year by The Motley Fool Motley Fool Money. If you're among them, you may like the simplicity of only having one account to manage.

While managing multiple credit cards isn't quite as easy, there are benefits to having at least two of them. When you only have one credit card, you expose yourself to some serious risks.

1. Your card could be lost or stolen

If you lose your credit card or notice any fraudulent activity, you can notify your card issuer online or by phone. It will then cancel your old card and mail you a replacement. Replacement cards usually arrive within about three to seven business days, but it depends on the card issuer and the shipping method.

That's still potentially a week or longer when you won't have a credit card. You'll need to rely on either your debit card or cash, which isn't as convenient. It also means you won't be earning any rewards on your spending. If you have any large purchases to make, it's frustrating to miss out on cash back or points because you're waiting on a replacement card.

2. Your card could be locked for security reasons

Credit card companies sometimes lock cards if they detect suspicious activity. Maybe you made a few transactions that tripped the issuer's fraud detection system, or there's an issue with the address you used when applying.

You can often resolve this with a phone call, but not always. There are situations where a card issuer may require you to provide documentation to verify your identity, address, or both. If so, it's helpful to have another card you can use in the meantime.

3. It may affect your credit applications in the future

There's a misconception that credit card applications depend entirely on your credit score. While that's important, it's not the only factor that card issuers consider.

They look at your entire credit profile, including how many credit cards you have. Some card issuers are known for denying applicants who only have one credit card. They prefer to approve people who have demonstrated that they can manage multiple credit cards effectively. If you've only had one card, that could prevent you from getting a new card you want in the future.

4. You could run out of credit if you need to make some big purchases

When you use a credit card, you need to be mindful of the credit limit. It's the maximum balance your card can have, and card issuers typically decline transactions that would cause you to go over your limit.

Having more than one credit card is a good way to give yourself additional spending power. It's still important to be careful about how much you spend so you don't go into credit card debt. But if you have several large expenses coming up, it helps to be able to spread them across multiple cards.

5. You won't earn as much in rewards

Earning rewards is one of the biggest perks of paying by credit card. Cash back credit cards are an easy way to save more money. There are also travel rewards cards that earn points you can use for your travel expenses.

You could do this with a single credit card, but it's possible to earn more back with multiple cards. Many rewards cards have sign-up bonuses for new cardholders, so if you're willing to open multiple cards, you could earn more of these.

You can also mix and match cards to earn more on your spending. For example, you could have one card that earns bonus rewards on gas and groceries, and another that earns bonuses on travel and dining.

Although you don't need a wallet full of credit cards, consider getting at least two. It's more convenient since you'll be ready if you have any issues with one of your cards. Being able to manage multiple cards looks good on your credit history. To top it off, you could get access to more credit and earn more rewards.