stack of credit cards

Credit cards can help you build a healthy credit history if you manage them properly. You may also benefit from rewards like cash back or points to be used for travel or other things you enjoy. Given these factors, it’s no surprise that of U.S. consumers who plan to apply for new credit or refinance in the next year, 57% are planning to apply for a new credit card, according to data from the Q4 TransUnion Consumer Pulse Study.

You may be asking yourself, how many credit cards should I have? As with most personal finance or credit questions, there’s no one answer that applies to everyone. The right number for you depends on your habits, goals and credit history. However, these are some of the considerations to make:

Is it good to have multiple credit cards?

Credit cards tend to come with more fraud protection than debit cards. Having multiple credit cards can be useful if one is compromised or lost. If someone makes fraudulent purchases with your debit card, you may be liable for part of the charges. For example, if you lose your debit card or it’s stolen, you need to notify your bank within two days of the loss. If you don’t, you could be liable for up to $500, according to the Consumer Financial Protection Bureau. With a credit card, you’re only liable for up to $50, per the Fair Credit Billing Act.

There are other advantages to having more than one credit card. Some people may open an additional card or cards to transfer a balance using a low promotional interest rate. Or, you may want to take advantage of cash back or opportunities to earn travel points with different cards. If you have control over your spending, a combination of cashback cards and travel rewards cards can reward you for spending you’re already doing.

Is it bad to have multiple cards?

If you have a hard time reining in your spending, having multiple cards can be an easy way to build up debt. Even if you’re confident with your spending plan, a portfolio of cards earning cash back to travel points may be difficult to manage. Not all credit cards have the same payment date, so if you’re not keeping track carefully, you can accidentally miss a payment, which can cause your credit score to drop.

Plus, some cards come with annual fees. For luxury travel cards, those fees can be as high as $500 or more. You may have a favorite hotel chain or airline, but you don’t necessarily need a credit card for each of them. If you’re not able to use all the accompanying benefits on all your cards through your natural spending habits, you could be wasting money.

How multiple cards can impact your credit

As you consider how many credit cards you should have, you’ll want to think about the potential impact on your credit. Applying for a new card can result in a hard inquiry on your credit report, which remains for two years. This may cause a temporary drop in your credit score.

In addition, a new card may impact your overall credit utilization. An important credit scoring factor, credit utilization, is the ratio of credit you’re using compared to the total credit limit of your revolving accounts. This includes all your credit cards. Aim to keep your utilization ratio below 30 percent; the lower, the better.

It’s important to know how adding or removing accounts may affect your credit limit and utilization rate. For example, transferring a balance between two existing cards won’t change your utilization rate. However, opening a new credit card will increase your credit limit. And if you close an account, your utilization rate may increase because you’ll lose access to that card’s credit limit. Carefully think through the impacts of adding or canceling a credit card before you act.

Tips for managing multiple credit cards

Before taking out a new credit card, take time to reflect on your overall financial picture. Are you keeping up with your bills today? You don’t want to get yourself into a situation where you’re spending more than you’re taking in. Transferring a balance to another credit card with a lower or promotional interest rate can help you save money in the short term, but new accounts won’t help curb poor spending habits. If taking out a new credit card tempts you to overspend, you may want to avoid it.

Also think through the practical implications of a new account. Would you be stressed by the prospect of managing multiple accounts, each with different payment due dates? Payment history is one of the most important credit score factors, so you don’t want to accidentally miss a payment. You may consider setting up automatic payments to help keep you on track.

Beyond making the monthly payments, you should regularly check your accounts for signs of fraud. If you do see something suspicious, contact your credit card issuer immediately.

How many credit cards is too many?

The right number of credit cards depends on multiple factors, from your budget to your approach to managing your money. You may know people who are hesitant to apply for even one card. Then, there are others who seem to have a wallet loaded with cards from every bank and travel company.

Before taking out a new card, you want to be sure applying for new credit fits with your credit goals and opens the right opportunities for you. Carefully considering the impact on your credit health and overall finances will help you make a well-informed decision.

If you have multiple credit card accounts, you can track them by consistently reviewing your credit reports.