8 min read

What's the ideal number of credit cards to have?

John Fitzsimons
1 March 2018

Is there really an ideal number of credit cards to have? And how many is too many when it comes to your plastic friends?

In reality, there's no magic answer to this question. Credit cards can be a great money management tool and they can help you pick up lots of extra rewards and benefits. But at the same time having too many can lead to financial issues.

It's more about how you use them that matters, but if you use them sensibly, there are some clear pros and cons to owning more than one.

Spending on at least one credit card can bring big benefits

There are a couple of significant benefits to spending on a credit card. The first is that it can help you to build a decent credit score. If you show that you can responsibly handle credit, then your chances of being accepted for a larger loan, like a mortgage, further down the line are much improved.

There is also added protection available when you spend with a credit card, thanks to Section 75 of the Consumer Credit Act. It essentially means that when you buy something with your credit card, if something goes wrong you'll be able to get your money back from your credit card provider. There are some limitations though. The item or service you’ve bought needs to have cost between £100 and £30,000, though only some of the purchase needs to have been made on the credit card.

Check your eligibility and find credit card offers tailored to your credit history in your ClearScore

Having more than one card can help you take advantage of better deals and added bonuses

The thing to remember about credit cards is that there are actually a number of different types which serve distinctly different functions. As a result, it can be a sensible step to have more than one card.

For example, let’s say you have a usual credit card for emergencies. However, you have a big spend coming up - perhaps there’s a baby on the way, or you are doing up the kitchen. If you put all of that spending on your existing credit card and then pay it off in stages, it will end up taking a while to clear the balance, and you’ll have to pay interest along the way as well.

A better option might be to go for a 0% purchase credit card, which doesn’t charge interest on new spending for a set period. Alternatively, you could do the spending on your usual card, then move it over to a 0% balance transfer card, which doesn’t charge interest on balances transferred onto the card for a set period (though you do have to pay a small transfer fee).

Alternatively, you might be the sort of person that likes to enjoy some sort of reward on your spending, whether through a loyalty point card (which might give you Avios every time you spend for example) or a cashback card. But as these are often provided by American Express, which isn’t accepted everywhere, you might want a second card to use if need be.

Finally, if you travel a lot, then you might want one of the specialist cards that are designed for spending overseas.

An additional card could even help your credit score

Having more than one card can actually help your credit score too. When calculating your score, one thing taken into account is your ‘credit utilisation’. In other words, how much of the credit at your disposal are you actually using?

If you are using a large percentage of the credit available to you, then that suggests you might be in a bit of financial trouble and so lenders may be less willing to lend to you. This could negatively affect your score.

At the other end of the scale, if you are only using a small amount of the credit available then that suggests you are a responsible borrower. So if you need more credit, for example, a mortgage or a personal loan, then lenders are more likely to feel comfortable agreeing to lend to you.

If you tend to use a high proportion of your available credit, then getting another card could be a good move. As long as you keep your spending the same, having a higher total credit limit will help bring your credit utilisation down. This can, in turn, have a positive impact on your score.

But too many cards may turn into a problem

There can be issues with having a handful of credit cards at your disposal though.

For one, there’s the question of self-discipline - if you went on a wild spending spree and maxed them all out, would you actually be able to afford the repayments?

It’s also true that having too many cards at once can make managing your finances more complicated - you might have perfectly good reasons for wanting three different cards, but that’s three different repayment dates to keep up with, three different balances to keep on top of.

Even without a big blow out, having debt on different cards can make you feel like you’re in a better position financially than you really are.

Applying for too many cards in one go can also do serious damage to your credit rating. Each time you apply, you leave a ‘footprint’ on your credit record. This is then visible to firms when they look at your credit record.

So let’s say that you apply for three credit cards all within a short space of one another - when the lenders look at your record, they will see that you have applied for a lot of credit in a short space of time, which is going to set off alarm bells. If you do want to apply for a card, be sure to only apply for one at a time. Leaving a couple of months between applications is usually a good bet.

The voice of experience

With no definite answer to this question, it all depends on what works for you. Personally, I can attest to the value of having more than one card - I currently have three. I have a balance transfer card from a previous large spend which I’m paying off in manageable chunks every month. I never tend to spend on this card.

Then I have an American Express cashback credit card, which I put all of my usual spending on to maximise the cashback I'm building up (every little helps after all). But as American Express isn’t accepted in all retailers, I also have a Tesco Clubcard credit card as a back-up.

It’s not always the simplest set-up - if nothing else, that’s three internet banking logins to remember, besides those for my actual bank account. But by checking the balances regularly and keeping on top of exactly where the money is going, it works for me.

Ultimately, it will come down to your own circumstances and what you feel comfortable with. You might manage fine without a single credit card your whole life, but on the whole having at least one card is beneficial to your overall finances. And it can possibly even be good to have more, as long as you're managing them sensibly and don't go overboard.

by John Fitzsimons

John Fitzsimons has been writing about money for more than a decade, with his work appearing in titles such as The Sunday Times, Forbes, the Mirror and loveMONEY. He's come on board to answer your trickiest money questions.

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