For most of your life, you have been and will be concerned about numbers. What grade did you receive on that science test? How high is your cholesterol? What is the right number of credit cards you should have?
The truth is that there is no magic number of cards that will automatically give you a perfect credit score or excellent rewards. Instead, you need to decide how many are right for you based on your lifestyle, your budget, your goals and your financial plans. Let’s break down the different amounts you could have, explain the reasons why each may be right for you and provide some tips to help you choose your ideal number.
Between One and Three Cards
On average, American adults have three credit cards to their name, according to information provided by a recent Gallup poll. In fact, most people have at least one card.
Having less can sometimes be more, especially when it comes to credit cards. The lower number of cards you have means you can more easily keep track of your spending. For example, you can make sure you pay your bills on time, track how often you use the cards, determine what you use the cards for and manage your money better.
If you’re just starting out or trying to recover from bankruptcy, one card is all you should have. That way, you can slowly learn how to use it, keep track of your spending and make your payments on time so you can trust yourself not to overspend and fall into debt.
Between Four and Five Cards
There’s nothing wrong with having more cards if you know how to use them. Some people have a different card for different spending habits and rewards. For example, you may want to have a different card for cash back rewards, miles and points. There are also some cards that have higher rewards for certain items, such as more cash back when you purchase groceries.
Other reasons you may want more cards is to have the flexibility in paying for different things, such as travel and associated expenditures, groceries, gas or the phone bill. This may help you simplify your finances and spread things out to make them more manageable for you.
As a last benefit, having more cards means you have more access to capital. There may be a medical emergency or a major car repair that you didn’t expect but need to pay for immediately. A credit card, or multiple cards, can help you pay off these expenses over a longer period of time rather than taking a large sum out of your checking or saving account all at once.
More Than Five Cards
People with more than five cards usually know how to maximize the rewards and their spending, thus making the cards work for them rather than being beholden to the cards or falling into debt. For example, if one card offers 2% cash back on your shopping at the grocery store, you could use that particular card just for that purpose. Another card may be specifically for miles, which may be ideal if you travel often. Still another card may offer higher rewards for buying gas at a certain gas station.
Varying interest rates are another advantage of multiple cards. If you need to make a large purchase but want to have lower interest on it, you can use the card in your wallet that offers the lowest rate and pay that purchase off over time without racking up too much interest. Having more cards may require you to be more savvy about your spending, but it can be advantageous to those who know how to navigate the complexities.
Tips for Determining the Number of Cards To Have
So how many cards do you need? If you don’t know how to determine the number of cards that is right for you, here are some helpful tips:
- Don’t take more than you can handle
- Decide what rewards you want
- Choose cards that can meet your needs, such as rewards for groceries
Choosing the Right Number for You
There is no magic formula or trick to having the right number of cards, which varies from person to person. Ultimately, the choice is up to you. If you want help boosting your credit score or getting it back on track through the use of credit, contact the experts at Coast Tradelines for help.