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How Many Credit Cards is Too Many?

There is no set number of credit cards that everyone should carry. Depending on certain financial considerations, let’s look at a range that will benefit you the most.

June 8, 2022

How many credit cards can an individual truly have? There is technically no limit to the number of credit cards you can have. You might even have quite a few if you are responsible with your credit cards and do not pay interest.

Credit cards, on the other hand, can be financially hazardous. The amount of credit cards a person can have is typically determined by their credit history and financial situation. If your credit card habits include exceeding your credit limit, you may struggle to manage many credit cards. If you apply for multiple cards, you may be denied in many circumstances. 

Just how many credit cards is too many? Let's take a look.

Do You Need Multiple Cards?

As a method to entice consumers and grow business, banks and card issuers typically give their best discounts to new sign-ups. Transferring a balance to another provider is often a great way to receive a top credit card rate or offer.

However, it may be prudent to avoid a one-size-fits-all strategy and obtain separate cards for various uses.

For instance, someone who wants to repay current credit card debt could get a balance transfer card with zero percent interest for a set period of time.

Those looking for a card to make a significant purchase, such as a vacation, might get a similar interest-free package that is confined to spending instead. Others looking for a card for everyday spending can opt for a rewards or cashback offer.

Unless you have a solid all-around card, mixing the use of your cards is usually not a good idea because specialized offers tend to have high rates for other sorts of borrowing.

For example, you could have to give up a favorable interest rate in exchange for an extended 0% balance transfer arrangement. Surprisingly, having only one credit card can make managing your debt more difficult.

The Credit CARD Act of 2009 states that any excess payments you make should be applied to the debt with the highest APR. If there is any remaining balance, it will be used to pay off the debt with the second-highest rate of interest.

How Many Credit Cards is Too Many?

There is no magic number of credit cards that you should have. Two cards may be regarded as excessive for someone who is unable to make two separate payments.

Remember that signing up for many cards in a short period of time is not a good idea. Credit card companies will view this conduct as a red flag because it may indicate an inability to manage your money properly. They may even cancel your account if they determine your actions to be too much of a financial risk. 

Applying for many credit cards in a short period of time may potentially harm your credit score. When you apply for multiple credit cards in a short timeframe, the inquiries made on your credit report can lower your credit score. Additionally, if you are approved for several new lines of credit, this can also negatively impact your score. 

How Can Having Several Credit Cards Affect My Credit Score?

Having multiple credit cards might help your credit score if you are a financially responsible consumer. Managing more than one credit account successfully can have a positive effect on your credit reports.

Your overall debt-to-credit ratio will be lower if you have multiple credit cards with low balances. This may improve your credit score. 

If you have two cards with a combined maximum of $5,000 and are currently only using $2,000, your debt-to-credit ratio is 40%. Applying for another $2,000 credit card brings your overall credit limit to $7,000, lowering your debt-to-credit ratio from 40% to 29%. Keep in mind that this method only works if you keep your card balances low.

Applying for a higher limit card while keeping the debt at zero is one way to improve your credit score. Alternatively, you might request a credit limit increase on a current card to prevent the negative impact a hard inquiry for a new card could have on your credit. 

Similarly, responsibly managing multiple cards over time can have a positive impact on your credit score. Again, it's not so much the number of cards as it is the kind of credit you manage and how well you manage it. If you handle them carefully, you can have ten different credit cards while still having a decent credit score.

The Advantages of Having Multiple Credit Cards

There is always a Plan B

Having a back-up plan is a good idea when it comes to finances, such as having a backup credit card. It might also be useful when you need extra cash to cover unforeseen bills.

Reduced debt-to-credit ratio

The debt-to-credit ratio expresses how much credit you use in contrast to your overall credit limit as a percentage. This ratio directly affects your credit score.

A credit utilization rate of no more than 30% is recommended. One advantage of having numerous credit cards is that if your costs on one credit card exceed the optimum 30%, you can simply use your second credit card. This type of cost distribution across numerous credit cards will assist you in maintaining a solid credit score.

Achieve maximum rewards

Purchases made with different types of rewards credit cards can increase your rewards. Some cards offer gas benefits, while others offer cashback. If you travel frequently, having one card that earns miles and another that earns hotel points can provide you with additional, travel-specific incentives such as room upgrades.

Use balance transfers to save money

You could potentially save money on interest by transferring a credit card balance from a high-interest card to a lower-interest card.

The Drawbacks of Having Multiple Credit Cards

It's easy to overspend

The more credit lines you have open, the more debt you could accumulate.

Multiple applications can be perceived as risky

Multiple credit card applications in a six-month period can make you appear less than creditworthy to credit card companies.

It's more difficult to stay organized

The more credit cards you have, the easier it is to lose track of credit limits or fail to pay bills on time. Your credit score will suffer as a result of late payment habits.

Several credit checks

When you apply for a new credit card, the issuer will do a hard check (or hard inquiry) on your credit score. A large number of hard checks can have an impact on your credit score.

Annual charges

Give some thought to the benefit of a credit card that imposes an annual fee. If any rewards or benefits you could reap won't exceed the amount of the annual fee, the card might not be worth the cost.

Final Thoughts

There are numerous advantages to having multiple credit cards, but only if they're used carefully. The question of “how many credit cards is too many” depends on a variety of factors. To maximize the chances of having multiple credit cards work for you rather than against you, keep in mind the payment due dates and your credit limit on each account, and note the benefits offered by each card.

It's a good idea to keep your balances low, pay your balances fully on or before the due dates, and use each card to its full potential.

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