How Many Credit Cards Should You Have?

Maybe you’ve got one credit card. Maybe you’ve got a wallet full of them. Either way, you might be wondering how many credit cards you actually need. The answer? Probably fewer than you think . . .

Sure, credit cards may seem harmless at first. But after a few too many swipes and some missed payments, you could be in for a world of hurt—in the form of late fees and interest. And with national credit card debt sitting at $1.26 trillion, plenty of Americans know that pain firsthand.¹

So, how does having multiple credit cards affect your credit score? What happens when you open too many? And do you really need a credit card in the first place?

Does Having Multiple Credit Cards Help Your Credit Score?

Having multiple credit cards can help your credit score—but not just because you have more cards. It’s because having more cards can increase your available credit, which is the total amount your credit card companies let you borrow.

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Credit reporting agencies look at how much of that available credit you’re actually using. That’s called your credit utilization rate. So, if you have a total credit limit of $10,000 and you owe $2,000 on your cards, your credit utilization is 20%.

In general, using less of your available credit is better for your score. That’s why some people open multiple cards. More cards can mean more available credit, which can make their utilization rate look lower. But let’s be clear: Taking on more opportunities to go into debt just to improve an “I love debt” score isn’t a winning strategy.

What credit companies want to see is a healthy relationship with credit (healthy for them, not you) over a long period of time. Basically, you’ve got to prove you use your credit card, won’t abuse it, and will keep it around for a while. Tough crowd.

Meanwhile, your credit card lender is tempting you to spend more with higher credit limits, points and other rewards. It’s just one more rule in a game that’s rigged against you from the start.

Does Having Multiple Credit Cards Hurt Your Credit?

Having multiple credit cards doesn’t automatically hurt your credit score, but applying for a bunch of new cards in a short period of time can. That’s because each application typically triggers what’s called a hard inquiry, which can temporarily knock a few points off your score.

And remember, credit scores also factor in things like how long you’ve had credit and whether you make payments on time. So, the more credit cards you have, the more accounts, balances and due dates you have to keep up with. Yeah, these lenders know exactly what they’re doing.

But this whole credit card game is just that—a game. And it’s not designed for you to win. It’s all about convincing you to chase after some random rating system the credit industry made up.

What Will Happen If You Open Too Many Credit Cards?

Open too many credit cards in a short period of time, and your credit score can take a hit. Like we mentioned, applying for new cards can trigger hard inquiries. Plus, opening several new accounts can lower the average age of your credit history—another factor that goes into calculating your score.

But credit score aside, having multiple credit cards doesn’t do you any favors. The more credit cards you have, the higher your chance of racking up a bigger balance. It’s like trying to keep a bunch of plates spinning—sooner or later, everything’s going to come crashing down.

Angelica from THE Ramsey Baby Steps Community Facebook group put it perfectly: “You can’t dig your way out of debt by borrowing more money. Just pay it off. Don’t make it complicated. Start with the smallest amount owed and throw everything you got at it. Get mad at these banks for getting rich off you while you stay broke and give them your hard-earned money every month.”

Is Having One Credit Card Okay?

No, even one credit card is one too many. You don’t need to borrow money to build wealth.

Look, you might think you can outsmart the system and play the credit card game to your advantage. Maybe that means keeping one card around or using a balance transfer to move debt to a card with a lower interest rate. But no matter how you play the game, credit cards just aren’t worth the risk. Just ask the millions of people trapped under the weight of credit card debt right now.

Instead of borrowing more money and going through the stress of paying it back . . . why not just pay with cash (or at least use a debit card)? Trust us, buying stuff you don’t need with money you don’t have always ends poorly.

And if you’ve already got a credit card, don’t keep it around just because you’re worried about your credit score. Cut up the card, pay off the balance with the debt snowball, and then close the account. Your score may change, but that’s okay. The goal is to get to a place where you don’t need to borrow money anymore.

Why You Don’t Need Any Credit Cards

You don’t need a credit card to build wealth, buy a house, or handle an emergency—despite what the credit industry keeps telling you. You can live (and thrive!) without a single credit card in your wallet.

And when you compare cash vs. credit cards, it’s pretty easy to see which one helps you keep more control of your money:

There’s a reason spending with plastic feels different than handing over actual money. When you don’t feel the money leaving your hands or your bank account, it’s easier to spend more than you planned. And no amount of points or cash back can make up for overspending your budget.

You don’t need a credit card for emergencies.

Putting an emergency on a credit card only turns one problem into two: Now you’ve got the emergency and debt to pay back. When a $400 emergency hits, 15% of Americans say they’d put the expense on a credit card and pay it off over time, and 12% say they wouldn’t be able to pay for the expense at all.³

That’s where an emergency fund comes in.

Instead of going into debt to replace your furnace that went kaput, you can dip into your emergency fund and pay yourself back later. Then you don’t have to worry about money stress adding to an already stressful situation. Doesn’t that sound nice?

So, if you haven’t already, start saving a $1,000 emergency fund as soon as you can. Then you can build it up to cover 3–6 months of expenses once you’re debt-free. (This is all covered in our plan, the 7 Baby Steps.)

You don’t need to build your credit.

It’s true that credit cards and credit scores go together like peas and carrots. So, when you use a credit card “wisely” (at least by the credit industry’s standards), you improve your score over time. And when you use it poorly or get yourself into a lot of debt, your score goes down.

But have you actually stopped and thought about what a credit score is? The thing that most affects your credit score is your payment history (aka making your payments on time for a long period of time). A credit score (or FICO score) is just a record of how you’ve borrowed money. That’s it!

The truth is, you don’t need to have a credit card or build your credit score in order to rent a car, rent an apartment, or even buy a house. And when you live on less than you make and have an emergency fund in place, you don’t need to borrow money . . . which means you don’t need a credit score anyway.

The credit card companies don’t want you to know this because then you wouldn’t need them anymore. And guess what? You don’t!

Credit card rewards aren’t worth it.

Everyone loves free stuff. And the appeal of credit card rewards and store credit cards is that you can earn them with just a swipe. But here’s the problem: The temptation to overspend with a credit card is a real thing. The fact is, too many people give in to it for a few measly points they may not even use.

No matter how careful and detail-oriented you think you are, one missed payment on your quest to beat the system will have the system beating you. The points just aren’t worth it. Especially if you look at how much money you have to spend to get a plane ticket or two. (You’re better off just buying it outright.)

Also, those precious points, airline miles, rewards and cash-back opportunities . . . they aren’t really free. You (and your neighbors) are paying for them with interest and fees! Yep—the credit card companies have rigged it so only they come out ahead.

How to Live Without a Credit Score

You can live just fine without a credit score. You can even buy a house or rent a car—you’ll just do things a little differently.

Let’s start with the big one: buying a house. Some mortgage lenders offer manual underwriting, which allows you to qualify for a mortgage without relying on a credit score.

But just because you can qualify for a mortgage doesn’t mean you should buy more house than you can afford. Put down 20% or more if you can, choose a 15-year fixed-rate mortgage, and keep your payment at or below 25% of your take-home pay.

And what about renting a car? Many major rental companies accept debit cards. You may have to jump through a few extra hoops—like having a larger hold placed on your account or showing proof of a return flight—but it’s totally doable.

Ditch Credit Card Stress

Plain and simple: Life is better without credit cards.

We live in a culture where you can get anything you want sent right to your door within a day or two. You can even have ice cream delivered if you don’t feel like leaving your house! It’s called instant gratification. And that kind of convenience isn’t cheap (just look at the fees on your last Postmates order).

And when you use a credit card to buy things you want right now (but can’t afford), you’re only doubling the cost. How? Credit cards set you up to overspend because it doesn’t really feel like you’re spending money in the moment. And before you know it, you’re trapped in the cycle of debt.

What if you didn’t have to be a slave to your credit cards? What if you could stop chasing after points and credit scores like a hamster on a wheel? What if you could buy something and not have to worry about making payments on it for the next several months?

The credit card industry wants you to believe you can’t live without its product. You can. It’s time to leave the credit card stress behind and take control of your money once and for all. EveryDollar helps you make a plan for your money so you can get out of debt and make progress toward your goals. Start for free today.