From credit cards and store-specific cards to debit cards, there are a lot of financial instruments available to you. Before you know it, your wallet is filled with plastic. At some point, you have to wonder: How many cards is “too many”?

Whether you’re looking to add a new card to your wallet or thinking you may have an excess already, this article will help you determine the best mix of cards for your unique financial situation.

Different Types of Cards You Can Carry

While there are many different cards out there with varying benefits, the two main card types are:

●      Debit cards

A debit card is issued by a bank and can be used instead of cash to make purchases. Unlike a credit card, the money is immediately transferred from the cardholder’s bank account. There are various types of debit cards, including check cards, ATM cards, and prepaid cards.

●      Credit cards

A credit card enables the cardholder to make purchases with the card issuer’s money based on the promise to repay the issuer the amount spent plus other agreed charges. There are three main types of credit cards: bank-issued credit cards, store cards, and travel/entertainment cards.

The right number of each type of card and the specific cards you should choose will depend on your financial situation and lifestyle. Before we get into that, let’s take a look at the pros and cons of adding a new card to your wallet.

Credit Cards vs. Debit Cards: Which Is Right for Me?

Understanding the differences in benefits between credit and debit cards can make you a smarter spender. Credit cards are good for users who need help building credit or want free money, extra purchasing power, or purchase protection on items they buy.

On the other hand, debit cards are best for those who like to keep their spending in check. If you manage your money on a budget, you might prefer a debit card because they can’t put you in debt. Debit cards also save you from paying an annual fee and give you instant access to cash when you need it.

It may surprise you to learn that some debit cards offer cash back rewards similar to credit cards. If you like the rewards of credit cards but don’t want to rack up debt, a debit card may be best.

Pros and Cons of Adding a New Card

Before making the decision to add a new card to your wallet, you should weigh the pros and cons. Here are the major things you should be concerned about when making the decision:

●      Advantages of adding a card

When you get a new credit card, more info will be reported to major credit bureaus each month, offering you the chance to build credit faster. Plus, credit cards give you more emergency spending power and access to better rewards.

●      Drawbacks of adding a card

Every time you apply for a credit card, it results in a “hard inquiry” that will reduce your credit score by a few points. If you’re not currently managing your existing cards well, adding a new one could prompt you to rack up more unsustainable debt. It also gives you another due date to remember and account to monitor, adding to your financial stress.

Tips for Choosing the Right Number of Cards

Now you know the different types of cards you can carry and the pros and cons of adding a new one. So how do you choose the right mix of cards? The tips below will help you make a well-informed decision when you’re thinking about adding a new card to your wallet:

1. Ask yourself, “Am I managing my current credit card perfectly?”

Whether you’re new to credit or not, start out with a single card. When you master the management of that card, you’ll know you can handle another one.

Remember that when you add a new card, you’re adding another payment due date. If you can’t keep tabs — and make timely payments — on multiple accounts, don’t add a new card. You’ll just complicate things for yourself and potentially damage your credit score.

2. Add more cards as your credit improves.

If you see that your credit score is improving, this is a tell-tale sign that you’re ready to manage more cards. Not only does a high credit score signal that you can manage credit, but it also means you’ll qualify for cards with better rates and perks. Many companies, including NerdWallet, allow you to check your credit score and obtain a free report online.

3. Don’t get a new card just to increase your spending limit.

If you’re getting a new card just for a higher spending limit, you’re doing it for the wrong reason. Someone who is managing their card well can usually ask for a higher credit limit and get it easily.

Going this route will save you the hassle of opening up a new card. It also avoids the risk — and the ding to your credit score — that goes along with applying for a new card.

4. Add a card because it provides benefits you’re not currently getting.

While a higher credit limit is a bad reason to get a new credit card, added benefits are a good reason. It makes sense to take out a new credit card if it will provide benefits you’re not receiving from your current cards.

For example, the Chase Sapphire Preferred card offers travel rewards and benefits, including double points on dining and travel. If you’re someone who travels a lot, adding this card to your repertoire would be a smart decision.

When trying to decide how many cards you should have in your wallet, it really comes down to two factors: First, can you manage debt well? Second, what are your spending habits like? Once you figure out the right mix of cards for your specific situation, you’ll be a smarter spender and achieve financial success sooner.


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