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Here’s how many credit cards you need

Emmie Martin

When used responsibly, credit cards are a helpful tool for making purchases, building credit and earning valuable perks . The average American holds 3.1 cards, with an average balance of $6,354 across all cards.

But how many is too many credit cards — or too few? Is there a magic number?

No, "there's not a one-size-fits-all answer," Greg McBride, chief financial analyst at Bankrate.com, tells CNBC Make It . "It depends on what you're using credit for and if you're disciplined about paying the balance in full every month."

How many cards you can reasonably keep track of without accruing debt? If you consistently pay off your entire balance every month, opening additional cards can actually boost your credit score.

That's because part of your credit score is determined by your credit utilization ratio, which is calculated by dividing your balance by your credit limit. Ideally, you want to use below 10 percent of your available credit line, and no more than 30 percent, McBride says.

Say your card has a $10,000 credit limit. You'll want to keep your balance below $1,000 and no higher than $3,000.

When you open a new card, the amount of overall credit available to you increases. If your spending habits stay the same, your credit utilization ratio automatically improves.

Credit cards also offer a host of perks, such as airline miles, hotel points and cash back. With regular use, a card tailored to your lifestyle can pay off big.


However, plastic might tempt you to spend more, in which case you're better off sticking with fewer cards or zeroing out your use of them altogether. "If you've got problems with overspending or a credit card represents temptation, then opening more is the last thing you want to do," McBride says.

It's never worth going into debt to earn credit card bonuses or to try and boost your credit score.

"The bottom line is this: Are you paying the balance in full every single month?" McBride says. "If the answer to that question is yes, then you're in a position where you can go out and open up more cards and utilize different cards for different purposes."

If the answer is no, focus first and foremost on getting yourself free from debt.

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