How Many Credit Cards Should I Have in Singapore?

Credit cards offer enticing benefits like cashback rewards, air miles, and exclusive perks. However, the "right" number of cards depends on your spending habits and financial discipline. In 2021, only 41.74% of Singaporeans owned a credit card, compared to 7.89% in Malaysia and 37.95% in China. This highlights the varying levels of credit card adoption across countries.

Starting with two credit cards — perhaps a general cashback card and one for specific spending categories — is a great baseline. This provides flexibility, a backup in case one card is compromised, and allows you to leverage different benefits for various spending needs. It's also worth having both a Visa and a Mastercard for wider acceptance.

While multiple credit cards offer a financial safety net and diverse rewards, responsible management is crucial to avoid debt mismanagement and missed payments. If you're struggling to keep up with multiple billing cycles or find yourself overspending, it may be a sign that you have too many. So, if you’re thinking, “How many credit cards should I have?” Consider your needs and your ability to manage your finances responsibly before deciding.

While there's no magic number for how many credit cards is too many, some signs indicate you might be overextending yourself. If you find it challenging to keep up with multiple billing cycles and due dates, this can lead to late fees and negatively impact your credit score. Similarly, paying hefty annual fees for rarely used cards suggests it's time to re-evaluate your credit card portfolio. Multiple credit cards can also create a false sense of limitless spending power, increasing the risk of overspending and accumulating unnecessary debt.

In this regard, it's important to be mindful of how your credit card usage affects your credit score. Opening too many credit accounts in a short period can be perceived as risky behaviour, potentially lowering your score. Maintaining a healthy credit utilisation ratio — the percentage of available credit you're using — is also crucial. Aim for a ratio below 30% to demonstrate responsible credit management. Additionally, closing older accounts can shorten your credit history, which may negatively impact your credit score.

If you're looking for alternatives to managing multiple credit cards, consider utilising instalment plans and 0% interest promotions offered by various merchants. These options can provide similar benefits to having multiple cards, such as spreading out payments and managing cash flow, without the added complexities of juggling numerous accounts and their associated fees and interest rates.

While having too many credit cards can be problematic, having too few can also have disadvantages. With fewer cards, you might have a lower credit limit on each card, which could lead to a higher credit utilisation ratio if you're not careful, potentially hurting your credit score. You may also miss out on various cashback or reward programmes offered by different issuers. Additionally, relying on a single card can be risky, as it may not always be accepted, especially when travelling overseas or making online transactions.

Finding the right balance is key. If your spending is primarily on essentials and you're comfortable with your current credit limits, two credit cards may suffice. However, if you travel frequently, have significant lifestyle expenses, or want to maximise rewards, adding one or two specialised cards may be beneficial.

Of course, it's important to remember that credit card eligibility criteria vary. In Singapore, the minimum age to qualify for a credit card is 21, so younger individuals may need to explore alternative options initially.

Ultimately, prioritise quality over quantity when selecting credit cards and carefully consider your wants versus needs. Choose cards that align with your spending habits, offer valuable rewards, and have reasonable fees and interest rates.

Each credit card application results in a hard inquiry on your credit report, which can slightly lower your credit score. While the impact of a single inquiry is minimal, submitting multiple applications within a short period can signal credit risk. To avoid any negative impact, space out your credit card applications by approximately six months.

Juggling multiple credit cards means staying on top of various due dates and credit limits. A helpful strategy is to automate monthly payments or adjust your due dates to coincide with your paydays. This ensures timely payments and helps you avoid late fees. Additionally, consider using budgeting apps or spreadsheets to monitor your spending and credit utilisation across your cards.

>> Read more: How to check your credit score in Singapore

If you're anticipating a significant purchase, such as a new home or car, it's wise to plan your credit card applications strategically. Applying for a new card can temporarily lower your credit score, so applying well in advance of your purchase allows your score time to recover. This ensures your credit score remains healthy when you need it most.

>> Read more: Best credit cards for big-ticket items

Is it good to have multiple credit cards? It depends. There are several factors to consider when assessing the impact of multiple credit cards on your credit score in Singapore. Here's a breakdown:

Your credit utilisation ratio, which is the percentage of your available credit that you're using, significantly influences your credit score. It's generally recommended to keep your utilisation below 30% on each card and across all your cards. Opening new credit cards can increase your overall credit limit, potentially lowering your utilisation ratio and improving your score. However, this assumes you maintain the same spending habits and don't increase your overall debt.

>> Read more: Things to know about credit score

Your payment history is a crucial factor in determining your credit score. Late payments can significantly damage your score, regardless of how many cards you have. Therefore, managing multiple cards responsibly and ensuring timely payments is essential for maintaining a healthy credit score. Consider consolidating your due dates or setting up automatic payments to stay organised.

The length of your credit history also plays a role in your credit score. Closing older credit card accounts can shorten your average credit age, potentially lowering your score. If you have multiple cards with the same issuer, consider switching to a no-fee version instead of closing the account entirely to preserve your credit age.

At the end of the day, the impact of multiple credit cards on your credit score depends on your financial behaviour. Responsible credit management, including timely payments and maintaining a low credit utilisation ratio, is key to maximising your credit score, regardless of the number of cards you own.