What Is the ‘Right’ Number of Credit Cards?

One of the most common credit-related questions I’m asked has to do with the “right” number of credit cards. And I’m clearly not alone. If you Google the question “What is the right number of credit cards?” you’ll find over 227 million results.

You will also undoubtedly find that a certain segment of the population will always decry credit cards as a source of problems which should be completely avoided. For these people, the perfect number of credit cards is probably zero. For the rest of us, the number is a real number with a real explanation rather than speculation.

For most people, the right number of credit cards equals however many cards they need to function efficiently. That could be one card, or 10 cards, and there’s really no basis for either end of the volume spectrum. No, the right number of cards is more of a credit score question than anything else. So, let’s back our way into this thing.

We all know that the optimal debt-to-credit limit, or “utilization” ratio, is below 10%. That would mean you’re well on your way to earning great FICO and VantageScore credit scores. So, in order to determine the right number of credit cards, you’ll have to know two things: your average aggregate monthly credit card balance across all of your cards, and the aggregate credit limit across all of your cards.

If your average aggregate monthly balance is $1,000 then you know you’ll need at least $10,000 in aggregate credit limits in order to maintain a debt-to-limit ratio of 10%. But even then, you’re cutting it too close. What if you charge much more than $1,000 in any given month? Your debt-to-limit ratio will spike, and your credit scores would suffer.

If, however, your average balance is a tiny percentage of your aggregate credit limit, then you’re done. You already have the perfect number of credit cards. Don’t close any of them and don’t open any more of them. If that number of cards happens to be three, or six, or nine, or whatever, it doesn’t matter. What matters is that your usage of credit cards has been completely declawed as a potential hazard to your score thanks to the limits on your cards.

For those of you who find that your debt-to-limit ratio is much higher because you either charge too much or you only have one or two cards with lower limits, or both, you need to do something — because your credit scores are suffering. You need to either charge less or open a few more cards so your aggregate credit limit figure dilutes your balance to the point that you’re almost always under 10%. Call it credit score insurance if you like.

And for those of you who are all “I don’t care what my score is,” I can assure you that pretty much everyone with whom you do any sort of financial business does care. Banks, credit unions, insurance companies, utility providers, landlords, cellular, cable, internet, satellite, credit card issuers… they all care and will charge you more or assess deposits if your scores aren’t good enough.

Related: What Your Credit Report Says About You Behind Your Back

So the real question for you is, “Do you like to save money?” or “Does it bother you to pay too much for stuff?” If the answer is yes, then you should take this credit card issue seriously.

Before we part ways, I want to point out that in the entirety of this article, nowhere did it suggest you have any specific number of credit cards. Want to know why? Because there is no right or wrong number of cards, it’s all a matter of opinion and personal usage. The credit score exercise above quantifies the issue, which in my mind is a much better way to tackle it.

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John Ulzheimer is an expert on credit reporting, credit scoring, and identity theft. He has written four books on the topic and has been interviewed and quoted thousands of times over the past 10 years. With time spent at Equifax and FICO, Ulzheimer is the only credit expert who actually comes from the credit industry. He has been an expert witness in over 230 credit related lawsuits and has been qualified to testify in both federal and state courts on the topic of consumer credit.

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