Jul 5, 2024
Americans had an average of 3.9 active credit cards as of the third quarter of 2023, down from 2017 when Experian reported the average was 4.2 active cards.
It might sound like a lot of plastic, but there's good reason to have multiple credit cards, including being able to participate in different rewards programs and take advantage of different cardholder perks.
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And don’t forget that credit utilization is a key factor in the credit scoring formula, which means having multiple cards can help improve your credit score by giving you more credit to work with.
However, you can definitely have too much of a good thing when it comes to credit cards. In fact, having too many cards can cause big financial problems.
While the definition of “too many” varies consumer to consumer, you definitely have too many cards if any of the following are true.
You can't keep track of all your cards
If you don't know key details of every card you have, you’ve crossed into the territory of having too many. Specifically, you should know:
- The approximate balance you owe on each card at any given time
- What perks and bonus reward each card offers
- The due date when each card must be paid
If you have a hard time keeping track of your combined balances and due dates, you can get stuck in a cycle of late fees and added interest that cost you more than any rewards or perks you may be earning. Not to mention you may end up damaging your credit score in the process.
Having so many cards you need a spreadsheet to keep track of rewards programs also doesn't make sense. When it's so hard to keep track of which card to use in any given situation, you'll most likely choose the wrong one sometimes and lose out on points, miles, or cash back that should be yours.
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You can't earn enough rewards to redeem them
With many cards, redeeming rewards makes sense only if you have enough of them. For example, you'll usually get the best value with travel credit cards if you cash your points in for trips — but you'll need enough points to actually travel somewhere in order to do that.
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If you have so many cards that you never get enough points to actually cash in your rewards, you have too many cards. You're better off reducing the number you use so your rewards balance can grow to the point that you can actually redeem.
You're paying annual fees for redundant benefits
There's nothing wrong with paying annual fees for a great credit card — if you're getting enough value to justify the cost.
However, if you have multiple cards that charge fees, you could find yourself paying out a combined amount that’s more than the cards are worth. That's especially true since many of the most expensive cards tend to offer similar benefits, such as airline lounge access or rental car insurance. You typically only need one card that provides these perks as you can't sit in two lounges at once.
Picking your favorite helps you save on fees and ensures you can actually use all the benefits you’re paying for.
Read More: Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
The bottom line
There's a good reason why the average American has around 3.9 cards in their wallet.
If you have a smaller number of cards, you may be missing out since there's a lot of variation in rewards programs and cardholder benefits. If you have more than that number, though, chances are good you'll start to get into the territory of redundant benefits and rewards you can't keep track of or use. You'll also face a serious risk of missing payments or not being able to keep track of what you owe.
You also need to be aware that opening too many cards in a short time can hurt your credit score by resulting in too many inquiries on your record. With potential damage to your credit record combined with the other downsides of a wallet full of cards, aim to stick with the average unless you have a very good reason not to.
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Christy Bieber has 15 years of experience as a personal finance and legal writer. She has written for many publications including Forbes, Kilplinger, CNN, WSJ, Credit Karma, Insurify and more.
