How many credit cards should I have?

Credit cards can be seductive. With extra purchase power and exciting perks, it’s tempting to hold as many as you can. Every card offer in your mailbox can feel extra special. But do you really need it? 

Let’s look at three common questions when coming face to face with new credit card offers.

1. How do I determine the right number of credit cards?

If your credit score is strong, you're likely to get multiple offers from card issuers. But that doesn't mean you should take them as they come. 

With a strong credit score and knowledge of how to responsibly manage your finances, multiple credit cards can bring real benefits, like more cash-back on spending and discounts on purchases. More credit cards can even improve your credit score, as long as you use it responsibly. 

When looking at a new card, consider the credit you already have. Do you use a lot of it every month? What's your current debt utilization ratio? 

For example, if you have two credit cards each with a $1,000 credit limit, and most months you charge $800 on both cards, your credit utilization rate is 80%. That's too high! (The ideal credit utilization ratio is below 30%.) Even if you pay off your cards on time and in full month after month, you'll still be penalized on your credit report. 

In cases like these, a new credit card that offers more available credit can raise your score and improve your credit history. However, it's important to use it. Adding a card just to improve your score can invite penalties on your credit report too. 

2. Are three credit cards too many?

The right number of cards depends on you and your personal finance skills. If you can't afford payments on a new card or if you just don't need it, avoid adding extra credit cards.

Consider your payment history. Can you manage a third card, with its own due date and minimum payments? If there's an annual fee, can you afford it? 

Rewards programs can be tempting. Warranties, travel rewards, and cash back credit cards can feel like good deals, but how much will you really benefit? 

And what if you fall behind? Like any credit card, do your research, compare interest charges and try to work with credit card issuers with no annual fees. If you handle it right and learned from  other card choices, your third card might be the best credit card in your wallet.

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                                                             9 smarter ways to use a credit card.

3. Will too many credit cards hurt my credit?

If you're trying to game the system, the answer is yes. Adding multiple cards over a short period of time raises a red flag with issuers. If you cancel cards after a special promotion ends or drop a card just before an annual fee, card issuers will notice this too. Credit bureaus like Experian, Equifax and others record activities like these, and issuers often consider it risky behavior. 

Again, if you can't pay your bills, avoid taking on more credit cards. Your first stop should be your everyday spending, taking a hard look at your budgeting and seeing how best to manage without adding more debt.

Adding more cards can get complicated, too, with more deadlines and payment amounts. Adding more credit card accounts can lead to missed or late payments, bad credit behavior that can ruin even an excellent credit score.

To make the most of multiple credit cards, use them strategically. If one card offers cash-back on a specific kind of purchases, use it to maximize your rewards. For example, some Discover cards offer discounts or cash back on groceries and gas, and some American Express cards offer perks like discounts on travel or special events. 

There is no magic number of cards you should carry, and credit card companies usually know what you want, targeting you with perks they know you'll find tempting. 

Regardless of the number cards in your wallet, avoid using them for purchases you can't afford. Try to use your cards for their convenience -- because it's easier than cash -- and avoid using them for overspending. Take another look at your debit card, too. You'll get the same convenience at the cash register, without piling up a big credit card balance. 

Use Bright to manage your card payments

If you've having trouble managing your cards or just looking for an smarter way to handle them, Bright pays off card debts automatically. 

Bright's A.I. system studies your finances and makes your payments for you, always on time and always optimized to save on interest charges. With Bright, you'll clear your cards faster -- automatically. 

If you don't have it yet, download the Bright app from the App Store or Google Play. Connect your bank and your cards, set your own goals, then let our Bright Plan get to work. Bright can even help you build more savings while pay off your debt.

Recommended Readings:

How to Choose The Best Credit Card for You

How to Lower Credit Card Interest & Processing Fees