Should you have 1, 3, 5 or even NO credit cards?
How many credit cards should you have? There are good reasons to have no card, have only one card, have two cards, have three cards, or even have 5 or more. I’ll explain, so you can decide what’s best for your situation.
Don’t have a credit card
There are definitely instances where it would be best to not have a credit card at all. If you struggle to control your spending when you have plastic in your pocket, any credit cards will almost certainly be worse for your financial well-being than if you had none at all. Also, if you regularly carry a credit card balance, you might find that you would pay less in interest over time if you didn’t have a revolving credit line. Credit cards are perfect for financial flexibility. You can borrow money and pay it off over time. Unfortunately, sometimes they are too flexible. If you only pay the minimum payment due on your credit card bills, you are paying interest on every purchase you make. That means that you are paying extra for every purchase. In that situation, you would be better off using a debit card.
1 Card
Having a single credit card is not a bad idea. If you are just starting out with credit, you probably should only start with one. Get used to how credit cards work…and how you work with credit cards before you add any others. But, it’s also not a bad idea to stick with one card forever. If a single card works for you and you value simplicity in your finances, don’t feel obligated to add credit cards. Many people can accomplish everything they want with just a single card.
2 Cards
The reason to have two credit cards is to give you flexibility. Unfortunately, it’s not uncommon for your credit card number to be stolen. If you report a stolen credit card number, you aren’t liable for any charges that the thief posts to the card, but it does mean that your card will need to be cancelled. The credit card company will send you a new card, but it could take up to a couple of weeks to get it.
Most merchants in the US accept all of the major credit card networks (Visa, MasterCard, AmEx, and Discover), but not always. And if you travel overseas, you might not experience the same coverage. So, having a second card can ensure you don’t get stuck somewhere without a working credit card.
What do you think? Is there another reason you have more than one credit card? Post a comment and let us know.
3 Cards
If you are trying to improve or maintain a strong credit score, three is a great number of credit cards to have. If you have three credit cards and you make a small charge on each one and pay the balance in full every month, you will log 36 on-time payments to your credit report every year. On-time payments are the most important factor in building and maintaining an excellent credit score. When we analyzed millions of credit files, we found that having at least 3 credit cards can help you improve your credit score quickly. Of course, you can undo any good that those on-time payments can create if you are late every once in a while or if you carry a high balance on them. A high utilization will drop your credit score. But, if you’re focused on building or rebuilding your credit and you don’t want to take years doing it, using three cards minimally could be your best way to do it.
5 or More Cards
Why would you ever want 5 or more cards? Believe it or not, many of the credit rating agencies like to see 5 or more credit accounts on your credit report. They don’t all need to be credit cards, of course. You could have a couple of credit cards, a mortgage, an auto loan, and student loans. I’ll be honest, though. That seems like a pretty terrible reason to carry a bunch of credit cards.
A better reason to carry multiple cards is if you can better manage the rewards on those cards. If you can keep track of points you get for each of the cards, having several cards could reward you for spending that you were going to do anyway. Some cards give reward multiples for travel, entertainment, grocery, or other things. Cards give rewards to get you to use their cards. Earning those rewards are a great way to get value from spending you would have done anyway.
Where to find your next card
If you think you might want to shop for a new card, consider going to The Yukon Project. We have a marketplace with all types of cards. You could definitely find one that helps you accomplish what you are trying to do with your finances. You can research their policies and their most recent incentives. It’s a fast and easy way to look at a lot of different brands.
If you have other reasons to have…or to not have…credit cards, leave a comment below. We are trying to build a community of people who can share their experiences so we can all be better informed when making decisions about our financial lives. If you found this information helpful, like this video and subscribe to our channel. Your support helps us out and we appreciate it.
