How many credit cards should you have?

What is the best number of credit cards to have?

There is no perfect answer or official limit on how many credit cards you can have, but the number of cards you do have can affect:

• Your credit record, which could impact you getting other cards, loans and mortgages

• The amount of time you need to spend managing your cards

• The amount of debt you can get into

It's worth noting that while there is no maximum number, in reality making applications for a lot of credit cards or lines of credit in a short space of time is visible on your credit report.

That means future lenders will be more likely to reject your application or offer you a worse deal - as it can seem you're desperate for credit.

Are there benefits to having several credit cards?

Having more than one credit card can often be helpful, as there are a number of different types of credit card available. Maximising the various credit deals available can help you save money, as long as you can confidently manage the credit. You can use cards to help you financially in four main ways.

Getting the best in class at each of these when needed means you're in the strongest possible position when it comes to spending and paying the least interest:

• 0% interest card for spending: you can spread the cost of a purchase without paying any interest charges by using a card that offers 0% interest on purchases

• Balance transfer card: by moving your credit card debt to a cheaper deal with a balance transfer credit card, you can significantly reduce the amount of interest you pay on a credit card balance

• Reward cards: there are specific credit cards which enable customers to earn cashback, air miles and other rewards on your spending

• Overseas card: you can save yourself fees and costs when travelling while using a credit card that is cheaper to use abroad

Credit card purchases costing between £100 and £30,000 also come with the benefit of added protection under Section 75 of the Consumer Credit Act. This means that should the company you purchase from go bankrupt or fail to deliver your items, your payment is protected (unlike when you pay on a debit card).

What are the drawbacks of having multiple cards?

Having multiple credit cards can be useful, but there are several drawbacks you should consider:

• Spending more than you can afford can happen quickly with several cards, as it can be easier to spend money you do not have and to lose track of how much you have spent across different cards

• Your total available credit is something lenders look at when making a decision to offer you a product - even if you're up to date and well within your credit limits, having a large amount of money (for example, equivalent to your annual salary) available to draw on can make other lenders nervous

• Missing a payment is more likely with lots of cards because it can be harder to manage and keep track of multiple cards. This can also have a negative affect on your credit record

• Annual fees or charges for not using a card could still cost you money

• Theft or other fraudulent use is more likely and harder to notice if you have lots of cards to keep track of

• Exclusive offers for new customers will not be available to you if you have kept a card open with the provider

How is my credit score impacted?

The number of cards you have will affect your credit score, as each credit card will appear on your credit report. If you apply for too many credit cards in a short period of time, your credit score will be impacted negatively and lenders may see you as a risky lender. 

That being said, showing that you have good credit utilisation can help to boost your credit score. Lenders are encouraged by evidence that you can manage your money without maxing out the available credit limit.

Should you cancel your cards?

Whether or not to cancel your cards will depend on your circumstances. If you close too many cards in a short space of time, you could be left without access to funds you might need in an emergency.

Try not to cancel too many at once because lenders look at how long you keep your accounts open, so closing several will bring this figure down.

However, it is worth cancelling cards you never use or that you think are harming your credit record. It may also be sensible to cancel cards if you find that you are struggling to manage your money. Having multiple credit cards comes with a number of downsides to be aware of:

• It can be easy to overspend. With numerous lines of credit, you can easily spend more than you can afford to repay without noticing the balance add up

• More organisation is required. Managing your budget and keeping track of spending becomes more difficult the more accounts and credit cards you have

• Fees and charges can add up. If you pay for cards which come with perks and benefits, make sure that the fees are worthwhile and that your rewards are worth more than the cost of the card or account

Which cards should you keep?

When you want to cancel one or more of your cards, work out which ones are worth keeping. This will depend on how you use your credit cards:

• If you always pay your cards off on time, keep the ones that offer you the best incentives for spending, like rewards, cashback or air miles.

• If you use them to borrow, pay off and cancel cards with high interest rates and keep those that offer a low APR or interest free periods.

You should also check for cards with fees, especially if you do not use them enough to get benefits like cashback or air miles.

How to cancel your card

Cutting up the cards is not enough to cancel them. You could still be charged fees and the card will show as open on your credit record.

Instead you need to pay off the card's balance and then contact your card provider to close your account.