I asked ChatGPT how many credit cards are too many; Experts filled in the gaps with what AI missed

Several banks have devalued their credit cards by cutting reward points, restricting lounge access and revising cashback benefits, prompting cardholders to wonder how many credit cards they should actually have to maximise benefits.

Most recently HDFC Bank capped the accelerated reward points earned through SmartBuy brand vouchers to a monthly limit of 3,000 points for premium credit cards like Infinia, Diners Black and Regalia.

While multiple cards can help you earn better rewards across different spending categories, they can also make it harder to manage payments and spending if not used responsibly. Here's what you need to know about finding the right balance.

How many credit cards should a person have?

According to three experts who spoke to Mint, there is no universal ideal number of credit cards that one should hold and it largely depends on a person's income, spending pattern and ability to repay on time.

“For most salaried individuals, 2–4 credit cards are enough to optimise rewards across categories like travel, shopping, and cashback without making finances difficult to manage,” said Ishan Tanna, Senior Associate at Ashika Capital. The views of the other experts were broadly in line with Tanna's assessment.

However, he added, the focus should be on repayment discipline rather than maximising rewards. Today, features such as AutoPay make it much easier to track multiple payment due dates and ensure bills are paid on time, significantly reducing the chances of missed payments and late fees.

Do multiple credit cards increase the risk of a debt trap?

More cards do not put you in a debt trap on their own and the risk starts when an individual's expenses are way more than they can repay, according to Adhil Shetty, CEO of BankBazaar.

The experts pointed to a few warning signs that indicate you may be falling into a debt trap due to excessive use of credit cards:

• Paying only the minimum due every month: Doing this means the rest of your balance keeps building interest at rates that may cross 40% a year.
• Using one card to pay another: If you are letting a balance carry over several month, or covering daily expenses on credit, that's a concerning sign. Missing due dates or turning every purchase into an EMI are warnings too.
• When credit utilisation ratio crosses a threshold: When the amount of credit you use compared to your total credit limit across all cards goes above 30%, it's a sign of concern. This often indicates that you are relying too much on credit instead of your own earnings to fund your spending.

When should someone consider closing an unused credit card?

Under Reserve Bank of India guidelines, if a credit card remains unused for more than 12 months, the bank must notify the cardholder, Aditya Gupta, Founder and CEO of Novio noted, adding that if the customer neither responds nor uses the card within 30 days of receiving the notice, the card issuer must permanently close the card account.

“Closing a credit card can reduce your credit score because it lowers your total available credit limit. As a general rule, you should never close a long-standing credit card. Preserve the oldest one,” he advised credit card holders.

How do using multiple credit cards affect credit utilisation ratio and score?

Multiple credit cards can actually help an individual's credit score if used well. A higher combined credit limit reduces the credit utilisation ratio, which is viewed positively by credit bureaus, provided spending remains under control, the experts noted.

“Ideally, utilisation should stay below 30% of the available limit. However, applying for several cards within a short period may temporarily lower the credit score due to multiple hard enquiries, while missed payments or high outstanding balances across cards can hurt the score much more significantly,” Tanna noted.

Citing an example, Shetty explained that if you spend ₹30,000 a month on one card with a ₹50,000 limit, that is 60% used. If you spread the same expense across three cards with a combined limit of ₹3 lakh, that ratio drops to just 10%, which is favoured by credit bureaus.

What ChatGPT said on how many credit cards one should hold and risks of over reliance

ChatGPT also mirrored the responses of the experts, noting that there is no ideal number of credit cards that suits everyone and for most people, 2–4 credit cards are enough to maximise rewards while keeping them easy to manage.

Having multiple credit cards can help you earn better rewards because different cards are designed for different spending categories. As banks may devalue rewards or change benefits, relying on just one card can reduce your overall returns, the AI bot's response read.

For example:

• Use one card that offers high cashback on online shopping.
• Use another that gives extra rewards on travel, fuel, or dining.
• Keep a premium card for airport lounge access and travel benefits.

According to ChatGPT's response, by using each card for the category where it offers the highest rewards, you can maximise cashback, reward points, and other perks. However, the benefits outweigh the costs only if you pay all bills on time and avoid spending more just to earn rewards.

While ChatGPT correctly suggested that holding 2–4 credit cards can help maximise rewards across spending categories, it missed some practical nuances which were highlighted by the experts.

They noted that repayment discipline matters more than chasing rewards, warned against signs of a debt trap, explained how multiple cards can improve your credit utilisation ratio and credit score if used properly, and cautioned against closing old credit cards because it can hurt your credit profile. These real-world considerations go beyond optimising rewards.