How Many Credit Cards Should You Have?

Many of my friends have asked me if it’s smart to open new credit cards to take advantage of the new account incentives. One such card is the Discover More Card, which currently gives you a whopping $100 for simply opening an account and spending $500 within the first 3 months. To me, this is a great deal because you can spend $500 in no time and also take advantage of one of the best rewards program for no annual fee cards. But not everyone should open a new credit card just to take advantage of the rewards perks. So, the real question to ask is how many credit cards should an average person own?

I’ll cut to the chase and say that an average person should own 3-4 credit cards with at least 3 cards being active, meaning used on a regular basis, every month. You should own a Mastercard/Visa, Discover Card, and American Express and carry them with you wherever you go. If that’s too much, you should at least carry a Mastercard/Visa card everywhere you go since they’re accepted practically everywhere, except Costco. Although Discover and American Express cards are widely accepted, there are still some vendors that do not take these cards due to their higher merchant fees.

In addition, you should use one card for every day expenses, another card for gas purchases, and the third card for online purchases. The 4th credit does not need to be used on a regular basis but can be set aside and used for emergency purchases. Perhaps, you can stash one in your glove compartment or somewhere else safe where you can pull out during emergencies in case your other cards are not available or you forget to bring your wallet with you or for reasons similar to that.

With that said, I don’t want to sound too cliche-ish, these also really depend on how you normally use your credit cards. If you currently have outstanding credit card debt, you should not open a new credit card. The only card I would suggest opening is a 0% balance transfer card and transfer all your debt into that card as a strategy for debt reduction. Close out the newer cards and keep the older cards, if possible. Credit scorer favor older cards over newer cards. If you have a bad habit of not making payments on time, then you should not open a new card. Opening a new card would probably make you worse off. Also, if your credit score is not excellent, meaning above 700, you should not open a new card. Work on increasing your credit score by making payments on time, every time, without exception. At best, try to keep your balance below 30% of the total credit limit. Above this number, it’ll hurt your credit score.

So, if you’re in good standing terms with your credit score, go ahead and open up a new card freely and enjoy the signing bonus perks. Just be smart with your spending habits and keep paying those bills on time.