There’s no easy and straightforward answer to how many credit cards you should have. While credit cards offer convenience, rewards, and even cash back opportunities, they also come with a number of responsibilities. If you don’t use them properly, you can quickly get into financial ruin. Let’s explore the factors to consider when deciding on the optimal number of credit cards in 2023.

Things to consider before getting a new credit card

Consider things like a credit card extended warranty, bonus categories for earning points, welcome bonuses, and other perks. You should also consider any issuer-specific perks. For example, there are a number of Wells Fargo credit card benefits that Bank of America might not have, and vice versa.

Also be aware of how opening a new credit account will impact your credit score. Each time you apply for a new credit card, a hard inquiry is made on your credit report. Multiple hard inquiries within a short period can negatively affect your credit score, as it may indicate to lenders that you’re seeking credit from various sources and potentially pose a higher credit risk. Additionally, opening several new accounts can shorten the average age of your credit history, which is another factor that influences your credit score. With this in mind, try to be selective and strategic when applying for new credit cards.

You should evaluate your spending habits and financial discipline – if you tend to carry balances and struggle with credit card debt, having multiple cards can exacerbate the situation. Instead of adding in another card, focus on paying off existing balances and practicing responsible credit card usage. On the other hand, if you are diligent in paying off your credit card bills in full each month and have a strong credit history, having multiple credit cards may offer more benefits than drawbacks.

Having a variety of cards can help you maximize rewards in different spending categories. For instance, one card may offer excellent cashback on groceries, while another may provide travel rewards for flights and hotels. You can optimize your rewards potential by strategically using different cards for specific expenses.

Obtaining multiple credit cards will also increase your overall credit limit. If you keep balances low, you’ll end up improving your credit utilization ratio, which measures the amount of credit you use compared to your total available credit. This is one of the most significant factors that influence your credit score. So, keeping it low, ideally below 30%, can boost your score.

Bottom line

The number of credit cards you should have in 2023 depends on your current financial situation and your future goals. By striking the right balance and being mindful of these goals, you can make the most of credit cards while maintaining a healthy and robust credit profile in 2023 and beyond.

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