Credit cards can be useful in building a higher credit score and financing some of life’s more expensive purchases. Hundreds of credit cards are available, which raises the question: How many should you carry?

For some credit-averse consumers, leaning on credit cards is a risky game that can lead to a debt spiral. For others, it’s an essential wealth-building tool that can expand their purchasing power and help them save.

How many credit cards does the average American have?

The average American has three credit cards, with an average balance of $5,525, down from $5,897 in 2020 and $6,494 in 2019. While less popular than traditional credit cards, retail credit cards still have a place in most consumers’ wallets. Most adults carry an average of 2.3 store cards.

According to 2022 data from the Federal Reserve, 82% of American adults have a credit card. While this is the majority, it signals that a significant portion of Americans still do not carry a credit card.

It also suggests that consumers can easily build credit with other types of loans like a mortgage, personal loan, car loan, and others. However, the numbers show clearly that credit cards are widely used and offer an accessible path to build a positive credit history.

For consumers who want to use a credit card as their primary tool for building credit, they might start with a student card or no-frills secured credit card. These types of cards are typically easier to qualify for and won’t charge an annual fee. Once you’ve used a credit card and made on-time monthly payments, you might consider adding a new card to the mix.

When it makes sense to get a new credit card

Credit cards are not all built the same, and there is no set number or specific type of card you should carry. Getting a new type of credit card could make it easier to pay down debt, finance significant purchases, build credit, start a business, and more.

Some consumers may choose to go without a credit card and work on building their credit by taking on other types of debt.

For others, the right mix of cards can help them save money and make it easier to reach their financial goals. Some of the most common card types include:

Rewards cards

Rewards cards can be useful for the cardholder who wants to save on travel, dining, and entertainment through cash back, points, or miles. If you’re a frequent traveler, issuers such as Chase, Capital One, Citi, and American Express all offer travel credit cards with lucrative rewards programs that can help you save on airfare, baggage fees, hotel stays, and travel insurance, among other services.

Balance transfer cards

Balance transfer credit cards are another type of credit card that may be worthwhile if your priority is to pay off credit card debt. These cards make it easier for consumers to pay off debt faster without being bogged down by high interest charges.

Cash-back cards

Cash-back cards can help you save on some of your day-to-day expenses by giving you back a percentage of what you spend on different purchases. Once you’ve earned enough cash back, you can redeem it for a statement credit, check, direct deposit, gift cards, and more.

Secured credit cards

For consumers who have a thin credit profile, secured credit cards – which require a cash deposit to open – can offer a chance to showcase their credit habits and build their credit score.

How to settle on the right number of credit cards for you

Landing on the "right" number of credit cards for your financial situation will depend on your budget, your future plans, and your comfort handling multiple accounts, each with payments due every month. How much you pay for your rent or mortgage, utilities and other household expenses, savings goals, and other debt obligations will help you determine how much credit you can manage.

If you're considering a new credit card, think carefully about your habits and upcoming purchases.

Watch video: How many credit cards should you have?

If you’re a frequent shopper at a particular store…

Apply for a credit card that will reward you for the purchases you already planned to make. Say you cook most of your meals at home and make weekly trips to the grocery store, a credit card like the Capital One SavorOne Cash Rewards Credit Card that rewards your spending at the grocery store and doesn’t charge an annual fee can help you lower your food bill each week.

If you regularly fill up your tank at the same gas station, or are planning a road trip, adding a fuel rewards card like the Citi Premier® Card to your wallet can help you earn rewards points each time you fill up.

If you have a major purchase on the horizon…

The right credit card can help you make that bigger purchase more manageable. Say you’re upgrading your home with new appliances, a credit card like the Discover it® Cash Back with a generous introductory offer could help you finance that type of purchase and pay it off over a longer period while lowering how much you pay in interest.

If your credit card balances are creeping up on you…

Adding the right type of card to the mix can be a key part of your repayment strategy. If you want to pay down some or all of an existing credit card debt, a balance transfer card with more favorable terms could cut down your repayment timeline. It may seem counterintuitive to add a new credit card to your plate if you’re struggling to make payments. Still, if interest charges are making it difficult to reduce your principal balance, a balance transfer card could work in your favor.

The Citi Simplicity® Card, for example, boasts a 21-month interest-free balance transfer period, then 19.24%-29.99% variable APR.

Do you prefer simplicity vs. playing the rewards game?

Some consumers thrive off the savings and perks their credit card rewards provide. However, this often comes at the cost of paying annual fees and being mindful of multiple monthly statements and various fee structures.

Travel credit cards, for example, boast lucrative rewards, but they can also come with above-average annual fees. The Capital One Venture X Rewards Credit Card, for example, charges an annual fee of $395, which may be more than some cardholders are willing to pay. But one major perk that can make this card more appealing is the annual $300 travel credit that Venture X cardholders will get back as a statement credit each year for bookings through Capital One Travel.

If you are the type of cardholder who can keep tabs on multiple credit cards each statement cycle, you might benefit from having more than one credit card. Still, applying for a new credit card is a big decision, and with greater access to credit comes greater responsibility. If you don’t have a good handle on your budget, having more credit cards could become difficult to manage.

How to start building your credit score with a credit card

Having a credit card gives you opportunities a debit card doesn’t. You can build credit using other forms of debt, but credit cards can provide a more immediate route to hitting your long-term financial goals while, with some cards, trimming your day-to-day expenses.

One of the pillars of credit-building and a key factor that credit bureaus and lenders consider is the length of your credit history, but building a good credit score takes time.

For many cardholders, building credit with a credit card starts early. According to Experian’s 2021 State of Credit report, the youngest generation of cardholders, Gen Zers, carry 1.7 credit cards, on average, with an outstanding balance of $2,312.

Cardholders often don’t have to wait until they’re 18 to start building credit. Consumers can start working toward that goal early as an authorized user on a parent’s credit card or with a student credit card and then grow into more complex credit cards as they learn to manage their credit and establish healthy financial habits.

The same data from Experian shows just that. Over time, most consumers tend to see their credit scores trend upward. While the average Gen Zer’s credit score sits at 660.5, Generation Y and Generation X have an average credit score of 667.4 and 685.2, respectively. Boomers and the Silent Generation have even higher average credit scores that sit well over 700.

How credit cards impact your credit score

Credit cards can play a key role in building and maintaining a strong credit score, but the number of cards doesn’t always directly affect your score. A credit score is a number calculated by FICO, which stands for Fair Isaac Corporation, and others that predict how likely a borrower will repay a debt. It’s based on information gathered by credit reporting agencies.

Your FICO credit score ranges from 300 to 850, with a score on the low end considered "poor" and a score on the opposite end of the spectrum deemed "excellent" or "exceptional."

So how do the major credit bureaus calculate your credit score? Well, they consider a few different factors.

Your payment history: 35%

Building a record of consistently paying your debts on time is the single most important thing you can do to increase your credit score. It shows you regularly meet your financial obligations and lenders consider it a sign that lending you money is a low-risk undertaking.

How much of your credit you use: 30%

Lenders want to know how much of your available credit you’re using, a measure known as your credit utilization ratio or credit utilization rate. Lenders consider a lower credit utilization ratio a sign that a borrower is paying their bills on time. It also shows how much credit you have available.

Most experts agree that you should try to spend less than 30% of your total available credit. Pushing it lower, by paying your credit card balances in full each month if possible, is a practice that will boost your credit score, and lower your costs.

Length of credit history: 15%

Your score takes into account the average age of your accounts, the age of your oldest account, and the amount of time since you last opened a new account. Usually, the longer your credit history, the better your score—if you’ve taken care to make your payments on time and not spend more than you can afford along the way.

New credit applications: 10%

Credit card applications can hurt your credit score if you apply for multiple new cards in a short period of time. Every time you apply for a new credit card or loan, the lender will look closely at your credit history—also known as a hard inquiry. These hard inquiries can cause your credit score to drop a few points—for a period of time.

A significant number of hard inquiries bunched together in time can be interpreted by lenders as a signal of unwise use of credit. Too many hard inquiries could not only ding your score, but it could make future lenders uneasy about doing business with you.

Credit mix: 10%

Your credit mix refers to the different types of revolving and installment debt that you carry. Lenders want to see that you’re able to manage different types of debt. Unlike installment debt which has a set payoff date and balance, revolving debt only requires a minimum monthly payment and allows borrowers to use as much or as little credit as they want.

When considering how many credit cards you should own, you should consider how adding a new card to your wallet will fit into your monthly budget as far as your minimum payment is concerned, when you last applied for a new card, as well as your other debt obligations.

Editorial Disclosure: The information in this article has not been reviewed or approved by any advertiser. The details on financial products, including card rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the bank’s website for the most current information. This site doesn't include all currently available offers.