Is It a Good Idea to Have Multiple Credit Cards?

Reasons to have multiple credit cards

Having more than one card may be a strategic way to improve financial flexibility and take advantage of exclusive perks.

From possibly boosting your creditworthiness to maximizing rewards, here are a few reasons you might want more than 1 credit card:

Creditworthiness

One major advantage of having multiple credit cards is that they can support your creditworthiness by impacting your credit utilization ratio. Credit utilization is the percentage of your available credit that you're using.

When you have multiple credit cards with varying credit limits, you gain more available credit overall. By keeping balances low relative to these limits, you could achieve a lower credit utilization ratio, which might positively affect your credit score.

Having more than one credit card also impacts your payment history and credit age. Your payment history is the most important factor in determining your credit score. This means paying your bills on time is much more crucial than the number of cards you hold.

Lenders also look for a long, steady credit history. But it's not enough to have just one old card — your credit scores consider the average age of all your accounts. So, opening a new card lowers that average age, which could negatively impact your credit.

Earn rewards and other perks

Another significant advantage of multiple credit cards is the chance to earn various rewards and benefits that suit your spending habits.

Many credit cards offer perks across categories, allowing you to earn rewards tailored to your lifestyle. For example, some cards may focus on travel, offering benefits like airline miles and hotel discounts, which could be ideal for frequent travelers. Others may offer cash back on groceries, gas, or dining, letting you earn rewards where you spend most often.

Store-specific credit cards could also provide exclusive discounts or rewards points that help you save when shopping at your favorite retailers.

Reasons not to have multiple credit cards

While having multiple credit cards may offer flexibility, it's not always the best option for everyone. Here are some key reasons why you might hold off on getting that additional card:

• Higher risk of missed payments: Managing multiple balances and due dates might lead to missed payments, harming your credit score.
• Additional fees: If your credit cards have annual fees, they can add up, reducing any potential financial gain from rewards.
• Hard credit checks: Applying for multiple cards in a short period results in multiple hard credit checks — when a lender or company requests to review your credit report as part of the application process — which may hurt your credit score, making you look riskier to new lenders.
• Increased temptation to overspend: Having access to more credit may lead to overspending, which could create financial strain.
• Complexity in managing accounts: Tracking different interest rates, terms, and rewards programs may add complexity, especially if you're new to credit management.

Managing multiple cards

If you decide that multiple credit cards are right for you, it's important to manage them well to avoid issues like overspending, missed payments, or fraud.

Here are some key tips to keep things organized:

1. Set up alerts and autopay: Use payment alerts or set up autopay for each card which may help you never miss a due date. Late payments can impact your credit score and often come with costly fees.
2. Keep track of spending categories: If you have cards that offer rewards on specific purchases, keep track of where you use each card. You might use one card for groceries, another for gas and another for travel purchases, helping you maximize your rewards without mixing things up.
3. Monitor your accounts for fraud: With multiple cards, it's critical to regularly check your accounts for unauthorized charges. Many credit card providers offer fraud alerts, which notify you of suspicious activity, helping you stay on top of account security.
4. Understand terms, rates, and fees: Each credit card may come with its own terms, including interest rates, grace periods, and fees. Familiarize yourself with these details to avoid costly surprises and ensure you get the best value from each card.

How many credit cards should you have? 

The right number of credit cards is ultimately personal and depends on your financial goals and management skills.

For some, two or three cards that cover different spending categories may be the perfect setup, while others may find that a single card suits their needs best. If you're confident in your ability to manage multiple cards responsibly, you could benefit from diverse rewards, an improved credit score, and greater purchasing power. However, if you're new to having credit cards or simply prefer simplicity, one well-chosen card might be all you need.

In the end, the best credit card strategy is the one that matches your lifestyle and financial goals.

Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.