Is It a Good Idea to Have Multiple Credit Cards?

Reasons to have multiple credit cards

Having more than 1 card may be a strategic way to improve financial flexibility and take advantage of exclusive perks.

Improve your creditworthiness

A major advantage of having multiple credit cards is that they can support your credit score by impacting your credit utilization ratio. Credit utilization is the percentage of your available credit that you’re using.

When you have multiple credit cards with varying credit limits, you gain more available credit overall. By keeping balances low relative to these limits, you could achieve a lower credit utilization ratio. That can positively affect your credit.

Keep in mind that having more than 1 credit card also impacts:

• Payment history: Your payment history is the most important factor in determining your credit score. This means paying your bills on time is key, regardless of the number of credit cards you have.
• Credit age: Lenders typically look for a long, steady credit history. Your credit scores consider the average age of all your accounts. Opening a new card lowers that average age, which could negatively impact your credit. But the longer you can keep your accounts open, the better it will be in the long run.

Earn rewards and other perks

Another significant advantage of multiple credit cards is the chance to earn various rewards and benefits that suit your spending habits.

Many credit cards offer perks across categories, allowing you to earn benefits tailored to your lifestyle. For example, some cards may focus on travel, offering airline miles and hotel discounts, which could be ideal for frequent travelers. Others may offer cash back on groceries, gas or dining, letting you earn where you spend most often.

Store-specific credit cards could also provide exclusive discounts or rewards points that help you save when shopping at your favorite retailers.

By having several different credit cards, each offering different rewards, you can choose the card that best aligns with specific purchases.

Reasons not to have multiple credit cards

While having multiple credit cards may offer flexibility, it’s not always the best option for everyone. There are several reasons why you might hold off on getting that additional card:

• Higher risk of missed payments: Managing multiple balances and due dates might lead to missed payments, harming your credit score.
• Additional fees: If your credit cards have annual fees, they can add up, reducing the potential financial gain from rewards.
• Hard credit checks: Hard credit checks happen when a company requests to review your credit report as part of the application process. Applying for multiple cards in a short period of time adds multiple hard credit checks to your credit report, which can hurt your credit.
• Increased temptation to overspend: Having access to more credit may lead to overspending, which could create financial strain.
• Complexity in managing accounts: Tracking different interest rates, terms and rewards programs may add complexity to your finances, especially if you’re new to credit management.

Managing multiple credit cards

If you decide that multiple credit cards are right for you, it’s important to manage them well to avoid issues like overspending and missed payments.

Some of the steps you might take include:

• Setting up alerts and autopay: Using payment alerts or setting up autopay for each card can help ensure you keep up with payment due dates and help avoid credit damage and late fees.
• Keeping track of spending categories: If you have cards that offer rewards or cash back on specific purchases, having a dedicated place to track where you should use each card can help you maximize those benefits. For example, you might use one card for groceries, another for gas and another for travel purchases.
• Understanding terms, rates and fees: Each credit card may come with its own terms, including interest rates, grace periods and fees. Familiarize yourself with these details to avoid costly surprises and ensure you get the best value from each card.
  Another factor to consider is fraud. With multiple cards, it’s critical to regularly check your accounts for unauthorized charges. Your credit card provider may offer fraud alerts, which can notify you of suspicious activity, helping you stay on top of account security.

How many credit cards should you have? 

The right number of credit cards is ultimately personal and depends on your financial goals and management skills.
For some, 2 or 3 cards that cover different spending categories may be the perfect setup, while others may find that a single card suits their needs best.

In general, if you’re confident in your ability to manage multiple cards responsibly and you could benefit from diverse rewards, an improved credit score and greater purchasing power, you may consider having multiple credit cards. Just keep in mind that you may not want to apply for multiple credit cards at once, as this can negatively impact your credit. For context, hard credit inquiries stay on your credit report for 2 years but may affect your score for 1 year. While you can apply for multiple credit cards at once, spacing out your applications may be a useful tactic to preserve your credit.

However, if you’re new to credit cards or simply prefer simplicity, a single well-chosen card might be all you need.

In the end, the best credit card strategy is the one that matches your lifestyle and financial goals.

Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.