How Many Credit Cards Should You Have
“How many credit cards should I get” is question I hear pretty often. There are many myths in this field such as what hurts and wheat helps your credit score. More people are starting to learn about the benefits of credit card reward programs with stories about the Chase Sapphire Reserve making headlines. At the same time consumer debt is starting to rise to record levels so caution is needed.
How many Credit Cards Does the Average American Have
The average American has 2.6 credit cards according to Gallup. This however, factors in the 29% of people who have no credit cards. When you look at credit card owners alone the number is 3.7 cards per person. I believe most many of these people have multiple cards to handle debt as apposed to maximizing the available rewards.
How your Credit Score is Determined
How your credit score is determined is one of the most common misconceptions out there. Having multiple cards that you pay on time actually helps your credit score because it lowers your amount owed. While applying for a new card temporarily dings your score it’s usually only a few points and will recover in a couple months.
Payment History – 35%
Amount Owed – 30%
Length of Credit History – 15%
Types of Credit – 10%
New Credit 10%
Which Credit Card is Best for Me
There are many factors that go into determining what which credit card is best for you. My focus is almost entirely on travel rewards, specifically airline points. I do this because it’s where you’re able to get the best value, often over well over 2¢ per point and they have sign up bonuses valued at $500 to $1,500. There are people however who would do best with a cash back card. For example a family with young kids who has no time to travel would probably benefit from a card like the American Express Blue Cash Preferred. This card offers an amazing 6% back on grocery store purchases, an area that likely takes up much of the budget in a growing family. I recently jumped on the current offer with a waived annual fee.
Ultimately one needs to look at their current needs and then do some research to determine what credit card is best for them. Continue to follow us at Deals ATX as we delve in deeper to the different cards available.