If you are trying to manage your finances and use your available credit, you might be wondering "how many credit cards should I have?" Our guide explains the pros and cons of owning multiple credit cards.
Credit cards are a useful financial tool to have in your wallet, as they can increase your spending power when you need it, or give you rewards back as you spend.
Here are some basic facts you should know:
There are 59m credit cards circulating in the UK, one for every person aged 16 and over. That means many people have more than one card
Too many cards could negatively impact your credit score
Having no credit card history could also hit your credit score
There's no right amount of cards to have: it depends on your ability to meet repayments, manage balances and how you choose to manage your finances
Different card types offer different services: consider the services you need and that you're unlikely to need more than one of each type
Keeping one credit card for several years can improve your credit score
There's no right or wrong number of credit cards to have. It depends on your financial circumstances, your credit score and how you manage your finances.
However, there are a few questions you should ask yourself before you get another credit card:
What are the benefits of this card and do you need them?
Can you afford to add another monthly payment to your existing financial commitments?
How much unsecured debt do you already have, and are you worried about it?
Your credit score is used to determine your eligibility for credit cards, loans and mortgages, and the number of credit cards you have will affect your credit score and having too many can be a problem.
Although you may use only a fraction of the credit limits you have available, landers take into account the total you could borrow if you maxed out all your cards at the same time. If that is a large sum, it may worry lenders that you would be unable to repay the cumulative debt
Paradoxically, having no credit cards can be a problem too, as you'd have no borrowing history. Having long-term relationships with credit card issuers, which show responsible borrowing and punctual repayments, will give you a good credit score.
Having no credit cards shouldn't damage your credit score, but it won't help to build it.
In theory there's nothing wrong with having several credit cards and provided you don't miss any monthly repayments on them, your credit score should remain healthy. But the more cards you have, the more risk there is of missing a repayment and damaging your score.
However, having credit cards which have never been used may also raise eyebrows with lenders in the future. If you have access to thousands of pounds worth of credit that you don't use, it might lead to lenders being concerned about why you're applying for more credit.
It's common for people to have more than one credit card. Trade body UK Finance reports that as of May 2022 there were nearly 59 million credit cards in the UK. That is nearly one for every person aged 16 and over. As many people do not have a credit card, it is common for people to have more than one.
Of those cards, more than 34 million had balances outstanding at the end of the month - they were not paid off in full - and the total amount borrowed was £54m, with more than half of that incurring interest.
Whether you have multiple credit cards, or no credit cards at all, it depends very much on personal circumstances. Also, what you're spending money on, and where you're spending it.
Some people use different cards for different types of spending. For example a self-employed person might put all their business expenses on one card and their personal spending on another, just so their records are separate and easy to manage.
You don't need to have any cards in your wallet and many people get by without them, but they can be useful depending on your needs.
There are a number of different of credit cards types, each designed to provide a different service. Realistically you're not likely to want more than one of each type at any given time.
0% purchase credit cards allow you to make purchases online and in most stores. You can avoid paying interest on balances for anywhere between three months and two years.
This effectively allows you to borrow money for free in the short term, but watch out - once the 0% interest period ends debts left on the card will be charged high interest rates (typically, somewhere between 17% and 30%).
If you're not careful about paying off your balance a 0% purchase card could end up costing you a great deal in the long run.
It's not wise to have more than one of these in your wallet because of the temptation of over-spending the 'free' money during the 0% period.
By transferring your existing credit card balance (or overdraft debts) to one of these cards you can avoid paying interest on your debts for anywhere between three months to three years. But transfer fees of around 3% of the value of the balance typically apply.
Like 0% purchase cards, once the 0% period expires you will be paying a high rate of interest, so make sure you have a plan in place to pay off your balance before the 0% introductory offer ends.
Also, make sure not to miss any monthly repayments: many cards will lose their 0% interest if you miss repayment.
How many transfer cards you should have is a question of working out the amount you can save by avoiding interest on your debts against how much it will cost you to transfer your debts to a new card.
You also need to think realistically about a repayment schedule and how disciplined you are with managing your finances. If you're good at meeting all your repayments and repaying balances before 0% periods expire, then you could consider more than one of these.
However, if you regularly miss repayments and don't pay off debts within the 0%, then it's prudent to limit how many balance transfer cards you have, or consider a debt-consolidation loan.
These cards are aimed at those who can pay off their balances in full each month - they offer rewards such as Avios points or cashback on your spending.
Where you can afford to pay off the balance on multiple cards in full each month then having a few rewards or cashback cards isn't a bad idea, but you should think about the benefits you want to receive for your spending.
Bear in mind that some of the cards that offer the best rewards are premium cards that charge fairly high APR or have a big annual fee, so these cards are only worth adding to your wallet if you really want, and think you'll use, the benefits.
Low APR cards are useful if you want to have one credit card and you expect to do sustained borrowing on it over several years.
An APR between 6% and 12% makes borrowing relatively cheap, and you don't have to worry about your interest rate suddenly shooting up.
This is a card you can keep for a few years to show long-term financial relationships, which can count in your favour with certain lenders.
However, as a consequence of being available to riskier cardholders the APR is often very high (around 30% to 50%), so you need to be careful about paying back your balances or debts could end up spiralling.
Ideally, you won't have any credit building cards, if you do, you don't really want to have more than one at a time as you should focus on managing one card until your score improves.
As a general rule it's good to stop using and close any credit card accounts with expired 0% interest periods.
The same rule applies to credit builder cards once your credit score has improved and you can switch to cards with a lower APR or more competitive rewards.
There are cards you'll want to have a long time and some that are useful for a short-term period of around a year or two.
You want to keep at least one credit card for a number of years, as long term financial relationships should reflect favourably on your credit score and some lenders are more likely to offer you credit.
Other than this card, you could keep the cards that offer you rewards you actually want and use in return for spending on them.
There's nothing wrong with having a 0% purchase card in your wallet, but you should honestly think about when you will most need a short term interest free credit injection.
While you can't plan for everything and it could take as long as a month to get a 0% card, it's still a good idea to keep your credit score clean and save applying for one when you really need it. The same applies to 0% balance transfer cards.
Of course, you could also be a 'rate tart' and flit between 0% offers never paying a penny in interest, but this requires you to be disciplined and on top of managing your finances.
Where you're good at juggling card balances between 0% deals you could even make money by 'stoozing', but this can be a risky and complex plan.
Whilst it might feel liberating and a good way to limit your risk of being a victim of card fraud, cutting up your plastic card does not cancel it.
To cancel your card you need to get in touch with your card issuer and tell them you wish to close your account with them. You will need to clear all your balances on the card (or transfer them to a new card) and pay any outstanding fees.
It's sometimes worth doing this as the threat of you leaving may prompt your card issuer to offer you a more competitive deal.
Often it seems like all the best credit card deals go to new customers and if your card issuer isn't offering you a better deal you could close an old card to go after a better new deal.
Typically, it will take around six months after closing a credit card account before an issuer considers you a new customer, but this period could be shorter or longer depending on the credit card company you're dealing with.
If you are keen to reap rewards when you spend but are restricted by a bad or non-existent credit rating, the good news is that there are still cashback cards available to you. These are not nearly as rewarding as others on the market though, so your priority should be to rebuild your credit rating to make yourself eligible for these more competitive cards in the future.
To rebuild your score you will need to use your credit card regularly, never missing a payment and always staying within the limit.
Use your cashback card to get a small reward for repaying in full every month while you work towards rebuilding your credit rating. Only get these cards if you can pay the balance off in full every month as the interest rate is likely to be higher than standard cards.
If you end up building debt on these types of cards you could wipe out any cashback gains you might have made and risk landing yourself deeper in debt and damaging your credit rating further.