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Can you have too many credit cards? It depends.
More than one or two cards might seem excessive to some, while others may open several new credit cards each year.
The largest collection of valid credit cards recognized by the Guinness World Records is held by Walter Cavanagh of Santa Clara, California, who has amassed a staggering 1,497 cards.
Extreme cases like Cavanagh got us thinking: How many credit cards does the average American have?
To figure out the answer, we reached out to several credit bureaus and analyzed anonymized member data from Credit Karma’s more than 75 million members.
Why is this important? Because the number of credit cards you have — and how you use them — could impact your credit scores and finances.
Let’s first dive into our findings. Then, we’ll discuss how opening and closing accounts could affect your credit scores and whether it’s a good idea to apply for more cards. In any case, you can probably rest assured that the ideal number is below 1,497.
How many credit cards does the average American have?
Based on data from March through June 2017, Credit Karma members have an average of 4.73 credit cards. This figure includes all of Credit Karma’s members as of June 2017, including those without a single credit card.
If that seems like a lot, it certainly appears to be more than the nationwide average. According to data compiled by TransUnion from the first quarter of 2017, the average number of credit cards per person is 2.69.
Note that this figure only includes people with at least one credit card, so it can’t be compared directly with Credit Karma’s own data.
TransUnion’s public relations consultant, Colleen Kennedy, also shared with us the average number of credit cards per person by metropolitan statistical area (MSA).
As with TransUnion’s nationwide figure, this data set (pulled in the first three months of 2017) only includes people with at least one credit card. Here’s how it breaks down by metro area.
Where’s the plastic? Credit card accounts by metro area
|Metro statistical area||Average number of credit cards per person|
|Minneapolis-St. Paul-Bloomington, MN-WI||2.53|
|St. Louis, MO-IL||2.64|
|San Diego-Carlsbad-San Marcos, CA||2.72|
|Atlanta-Sandy Springs-Marietta, GA||2.76|
|Dallas-Fort Worth-Arlington, TX||2.80|
|Houston-Sugar Land-Baytown, TX||2.83|
|Tampa-St. Petersburg-Clearwater, FL||2.87|
|San Francisco-Oakland-Fremont, CA||2.91|
|Los Angeles-Long Beach-Santa Ana, CA||2.96|
|Miami-Fort Lauderdale-Pompano Beach, FL||3.02|
|New York-Northern New Jersey-Long Island, NY-NJ-PA||3.06|
Source: TransUnion LLC
From the looks of it, folks in New York City and Miami are more likely to open credit cards, while those living in areas like Minneapolis and Seattle may be a little more conservative when applying for new cards.
The number of credit cards you have may affect your credit
There isn’t a magic number of credit cards you should have, although having at least one card may be a good idea if you want to build credit.
Generally, how you use the cards is more important than how many credit card accounts you have open.
Factors like your credit utilization rate (the percentage of your available credit that you use) and your payment history tend to have a more significant effect on your credit scores.How does your credit utilization rate affect your credit?
A new credit account could help your credit scores because it adds to your total available credit, which can lower your utilization rate.
It may be easier to keep your utilization rate low if you have several credit cards and can spread out your purchases across those cards.
But keep in mind that certain credit score models look at your overall credit utilization and the utilization on individual credit cards.
If you’re using multiple cards responsibly and paying off the full monthly balance on time on each card, you’re also adding positive information to your payment history.
Be careful, though: If you tend to spend more than you earn, you could wind up with a lot of debt if you have access to several credit lines.
It’ll also be more difficult to keep track of all your cards, and you could end up making a late payment by mistake.
Opening and closing accounts can also have an effect
Opening a new credit card account or closing an account can affect your credit in several ways.
Opening a new account
When you apply for a new credit card, the issuer will likely do a hard pull on your credit (also known as a hard inquiry).
This allows the issuer to review your credit report(s) and score(s) when determining whether they’ll approve your application.
Hard inquiries aren’t a major factor in determining your credit scores, and sometimes one hard inquiry won’t have any impact.
Other times, however, a hard inquiry may lower your credit scores by several points. If this happens to you, don’t worry too much: Your scores may rise back to the pre-inquiry level, or climb even higher, within a few months (as long as you’re practicing overall good credit habits).
Still, it’s a good idea to take every credit card application seriously. Frequent hard inquiries, or a hard inquiry if you have an otherwise thin file (you don’t have much credit history), could have a greater negative impact on your scores.What does it mean if I have a thin file?
Closing an existing account
Closing an account could lower your utilization rate, which may lower your scores.
A closed account that doesn’t have a derogatory mark, such as a late payment, will remain on your credit reports for up to 10 years from the date of last activity.
When you close an account that has at least one derogatory mark, the account will fall off your report up to seven years from the first derogatory event (or up to 10 years for bankruptcies).
Once a closed account drops off your report, the average age of your accounts — another minor credit score factor — could decrease. Generally, the higher the average age of your accounts, the better, so this may have a negative effect on your credit.
Potential issues with having a lot of credit cards
For those who enjoy using rewards credit cards, optimizing each purchase, and keeping close track of points or miles in different programs, having multiple credit cards can be an effective way to maximize rewards and travel perks.
But it can be hard to keep track of all those programs and card details. Even if having many credit cards doesn’t negatively impact your credit scores, it could have other financial implications if you don’t keep a careful watch over your various accounts.
Here are some questions you may want to consider before applying for multiple rewards cards.
- Will fees eat into the value of owning multiple cards? Some people close or downgrade card accounts to avoid paying annual fees. Others find the value they get from the credit card’s benefits or rewards program is worth the fee. If you have too many cards to manage, you could wind up paying a ton in fees without making great use of the individual cards.
- Will you be able to properly track your spending and bills? It can be easier to manage your finances if you only have a few accounts to track. Using multiple cards, you might spread your spending across accounts and be surprised by the total at the end of the month. Unless you enable auto pay, you also risk missing a payment, which can lead to a late payment fee and could negatively affect your credit. And remember – even if you set up auto pay, you still need to make sure you have enough money in the connected account when payment day rolls around.
- Losing points or miles. When you close a rewards credit card, you could forfeit any remaining points or miles in the account. Try to use them all, or if the issuer allows it, transfer them to another card account from the same issuer. The frequent-flyer miles or hotel points you can earn with travel credit cards are typically stored within the airline or hotel rewards program connected to the card, so you probably won’t lose them if you close your card – but it’s best to check with the issuer to make sure.
When it comes to credit cards, it can be tempting to compare yourself to the average American. But try not to overthink the statistics. The number of cards that’s best for you might not be the average number. Find a number that’s comfortable for you to manage and helps you achieve your financial goals. Whether that number is one, two or 1,497, well, we’ll leave that up to you.