5 Perks of Having 5 or More Credit Cards

Having several credit cards is a great way to earn more rewards and possibly even raise your credit score, as long as you use them responsibly.

The standard recommendation for credit cards is that you should have one or two. Maybe three, but any more than that will have people questioning your financial smarts.

Now, it's absolutely true that there are risks to opening too many credit cards. It's more difficult to stay on top of credit card due dates and avoid missed payments. And you'll need a lot of discipline to refrain from overspending. That's the case even with just one credit card, but it gets harder when you have more.

But if you can handle the added responsibility, there are advantages to opening several different credit cards. Let's take a look at a few.

1. You can collect more sign-up bonuses

When it comes to earning credit card rewards, nothing beats sign-up bonuses. Some of the best sign-up bonuses are worth $500 or more, and you can even find the occasional bonus worth over $1,000. Bonus requirements vary, but the standard rule is you need to spend a certain amount to earn the bonus.

Getting more credit cards gives you more of these bonus opportunities, but you will need to keep track of the requirements so you don't miss out on any bonus rewards. And you'll need to know what application rules card issuers have. Some limit the number of cards you can open with them or even how many cards you can open in a set period of time -- Chase's 5/24 rule is a well-known example of the latter.

If you can stay on top of those bonus requirements and application rules, more bonuses are a great way to maximize your credit card rewards.

2. You earn more rewards on your purchases

Rewards credit cards all shine in different areas. Some are good for gas and groceries and will earn more back on those purchases. Others offer bonuses in different categories, such as dining, entertainment, travel, or streaming services. And there are also rewards cards that stand out by offering a respectable rate, such as 1.5% or 2% back, on all your spending.

As you can imagine, this is another way you can come out ahead if you combine credit cards. You could score bonus rewards on gas, groceries, dining, travel, and almost any other spending category you want. Then, you could add one of those flat-rate cards to get 1.5% or 2% on purchases that don't fit into any of your cards' bonus categories.

Just remember, the goal is to earn more back on your regular expenses. Don't fall into the trap of using those rewards as a justification to spend more. Credit card rewards aren't worth abandoning your budget for.

3. It could raise your credit score

One of the biggest factors in determining your credit score is your credit utilization ratio. The agencies that calculate your credit score take all your reported credit card balances, then divide those balances by your credit limits. The result is your credit utilization, or how much credit you're using compared to how much you have available.

The lower this number is, the better. That's why having more credit cards can actually help your score. If you have one credit card with a $500 balance and a $1,000 limit, you'd have 50% credit utilization, and it would likely lower your credit score. But if you had five cards with $1,000 limits and a total balance of $500, you'd have 10% credit utilization, and your score would be higher.

You'd be carrying the same balance, but with much more available credit. From a credit-scoring perspective, that's better. That's assuming you don't go out and spend more money, though. If you had a $500 balance on each card, your credit utilization would be the same. You'd also have much more credit card debt. This is why you need to be even more careful about overspending when you have more cards.

4. You can mix and match the credit card features you want

You may not find all the features you want in a single credit card. The nice thing about being open to multiple cards is that there's no need to be that choosy.

Maybe you want a credit card with an airline you use often because it will get you a free checked bag. But you also want a card that gets you elite status with your favorite hotel chain and a card that offers complimentary insurance for your cell phone.

To be fair, you'll need to consider annual fees for any cards you open. An annual fee is only worth it if you get more value from the card than it costs you. Still, the fact remains that when you have more credit cards, you get a lot more benefits.

5. You have plenty of backups if any cards are compromised

It's inconvenient when you lose your credit card or need to get it replaced because of fraud. But it isn't nearly as big a deal when you have several other cards you can use while you're waiting for a replacement.

I recommend everyone have at least two credit cards for this very reason. And more credit cards give you more protection. For example, you can keep one or two cards in a safe place at home. That way, you're not completely out of luck if you lose your wallet.

Carrying more credit cards isn't right for everyone. For most consumers, I think two is just about perfect. There are, however, benefits to carrying more. Let's say you're a credit card enthusiast and you'd like to get more value from your credit cards. You could think about gradually adding more and see how it works for you, as long as you're confident you can handle them.