How Many Credit Cards Do You Need As An Entrepreneur? (2024)

FAQs

How Many Credit Cards Do You Need As An Entrepreneur? ›

The short answer is, it's only worth it to have multiple cards on two conditions: First, your business must be able to spend more than $5,000 per month on credit cards — the more, the better. Second, you have to be willing to travel on vacation.

If your goal is to get or maintain a good credit score, two to three credit card accounts, in addition to other types of credit, are generally recommended. This combination may help you improve your credit mix. Lenders and creditors like to see a wide variety of credit types on your credit report.

You really only need one credit card to start accumulating credit, but the more you have and the more responsibly you use them, the more opportunities you have to earn points and gradually increase your credit line.

So, while there is no absolute number that is considered too many, it's best to only apply for and carry the cards that you need and can justify using based on your credit score, ability to pay balances, and rewards aspirations.

Though there is no limit to the number of business cards you can apply for, you'll want to take into account that every application initiates a hard inquiry on your credit report.

There is no right number of credit cards to own, and owning multiple cards gives you access to different rewards programs that various cards offer. Owning five cards, for example, would give you a bigger total line of credit and lower your credit utilization ratio.

How many credit cards is too many or too few? Credit scoring formulas don't punish you for having too many credit accounts, but you can have too few. Credit bureaus suggest that five or more accounts — which can be a mix of cards and loans — is a reasonable number to build toward over time.

Key takeaways

Having multiple cards can help you build credit more quickly, but your focus should remain on using your card — or cards — responsibly for the best impact on your credit.

According to an Experian consumer credit review, Americans have an average of 3.84 credit cards per person. While that may seem like too many for some, others may consider it not enough. How many credit cards you should have in your wallet is a personal decision that's entirely up to you.

However, multiple accounts may be difficult to track, resulting in missed payments that lower your credit score. You must decide what you can manage and what will make you appear most desirable. Having too many cards with a zero balance will not improve your credit score. In fact, it can actually hurt it.

What is the 5 24 rule? ›

The 5/24 rule is an unofficial policy that dictates that Chase won't approve you for its cards if you've opened five or more personal credit card accounts from any issuer in the last 24 months. Put simply, the number of cards you've opened in the previous two years will affect your approval odds with Chase.

There's no such thing as a bad number of credit cards to have, but having more cards than you can successfully manage may do more harm than good. On the positive side, having different cards can prevent you from overspending on a single card—and help you save money, earn rewards, and lower your credit utilization.

Credit experts advise against closing credit cards, even when you're not using them, for good reason. “Canceling a credit card has the potential to reduce your score, not increase it,” says Beverly Harzog, credit card expert and consumer finance analyst for U.S. News & World Report.

Separate your personal and business expenses – One of the main benefits of having an LLC is to limit your personal liability. The same is true of having separate personal and business bank accounts, including credit cards.

The loan amount you're approved for will probably fall between $5,000 and $500,000. Most lenders — both online and traditional — advertise lending amounts within this range. However, if you need more cash, you may be able to find it.

For instance, Capital One limits the total number of credit cards you can have with them to five. That includes personal and business cards.

According to an Experian consumer credit review, Americans have an average of 3.84 credit cards per person. While that may seem like too many for some, others may consider it not enough. How many credit cards you should have in your wallet is a personal decision that's entirely up to you.

Closing a credit card can impact your credit scores, which can make it harder to qualify for new loans or lines of credit until your scores recover. While it may be a good idea for some cardholders, canceling your card isn't your only option.

In general, keep unused credit cards open so you benefit from longer average credit history and lower credit utilization. Consider putting one small regular purchase on the card and paying it off automatically to keep the card active. At Experian, one of our priorities is consumer credit and finance education.