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Business / Personal Finance

How Many Credit Cards Do I Need? Here’s Your Answer.

by Melody Bryn | November 23 2018

credit card online purchase

Credit cards are something that nearly every adult has, and often more than one. It’s not uncommon to have one from your bank, one from your favorite retailer, and one from an airline. Some people even have more than that. Each comes with its own set of benefits and points (as well as its own fees and interest rates). For this reason, not all credit cards are created equal, so it’s important to know what they’ll cost you and which will give you the best rewards.

So, how many credit cards should you have?

Like nearly any money-related question you’ll ask, there’s no simple, one-size-fits-all answer to this question. There’s no “right” number, though it’s recommended you have at least one in order to build credit (age of credit is important, so the earlier you start, the better). Still, here are some guidelines to follow when deciding if another credit card is a good decision (assuming you’re an adult).


Do you have a credit card yet?

No, I don’t.

You should probably go ahead and get a credit card then. The best option for a first card is one from your bank that doesn’t have an annual fee and has a relatively low interest rate.

Yes, I do.

Ok, then here’s where it gets a little trickier. It comes down to whether there’s any true benefit to getting that additional credit card, or if you’re just falling prey to a marketing scheme that’ll ultimately cost you more than you get back. Read on to get more insight on this decision.


What kind of card is it?

A card from my bank with no annual fee/low rate.

This kind of card is nearly a no brainer. If it’s not going to cost you anything in the form of an annual fee, then there’s almost no downside. The only thing to be aware of is credit inquiries — every time you apply for a card, you’ll get an inquiry on your credit report. This may temporarily bring down your credit score slightly, so avoid opening a credit card account right before you plan to apply for a loan or otherwise.


An airline credit card.

With these cards, it’s a matter of figuring out if the money you spend is worth the rewards you get back. For the standard Southwest Airlines card, for example, the annual fee is $99. So one way to look at it is: Will I get enough reward points in a year on my normal purchases to be worth more than $99 spent at Southwest? In other words: Does my $99 spend through this credit card fee give me more benefit than just spending $99 at the store directly? This is just one way to look at it, and of course this example just relates to the Southwest Airlines cards. Rewards are variable, so look at guides like this one in order to get a sense of what you get back from your dollars spent.


A “store” credit card.

Virtually every store or company has a credit card now, even Uber. The most important consideration in this case is, again, the annual fee. Are you going to be spending more than what you actually get back? Additionally, think realistically about the rewards you’re getting. If you “earn” discounted prices on items and that’s about it, then you aren’t actually getting much from this card, especially if you’re paying an annual fee. These discounted item prices are there to incentivize you to spend more money — on things you wouldn’t have bought otherwise. However, if you are getting real rewards in the form of store credit (and especially if there’s no annual fee) and it’s a store you’re going to shop at anyway (whether or not you have their store credit card), then it’s a good idea to get the card. Always ask yourself if having the card is going to change your behavior (i.e. you’re going to shop more), and honestly determine if you’re getting rewards for what you’ll buy anyway, or if you’re getting rewards because you’re spending more money in order to earn rewards.


A different kind of card.

No matter the card type, simply think in terms of “cost to me vs. rewards earned.” Ask yourself honestly if you’re going to have to spend more money in order to get “free” items, or if you’re actually earning rewards on purchases you’d make anyway. Don’t fall in the trap of credit card promotions coming to an end, either — there will always be a credit card promotion running.


Credit cards can be a great way to get cash back, free flights, and more. Just always pay attention to what the cardholder terms are, and always try to avoid accruing interest. Racking up interest makes that rewards card even more expensive (on top of the annual fee), and therefore makes the rewards you get worth even less.


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