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How many credit cards is too many?

minute read

    To answer how many credit cards is too many, you're going to be the best judge because one number does not fit everyone. However, we're here to help you decide.

    For some people, having several credit card accounts makes sense. For others, meeting all your needs with a single credit card might be the best option.

    In this article, we'll review:

    • Are there limits on how many credit cards you should have?
    • How many credit cards should you have?
    • Can opening too many credit cards impact your credit score?
    • Does the number of credit cards you own affect your credit score?
    • Are 5 credit cards too many?
    • Are 10 credit cards too many?

    Are there limits on how many credit cards you should have?

    Hopefully you're not disappointed to learn that there is no official, widespread restriction on the number of credit cards you can have. Credit card issuers either approve or deny applications all the time. Therefore, it makes sense to presume these companies might be the ones to set a limit, but they don't. Lenders evaluate applications differently. 

    How many credit cards should you have?

    All things considered, it's up to you to determine how many credit cards you should have. To help you determine the ideal number of credit cards to have, we'll explore several questions you can ask yourself. 

    How much in annual fees are you comfortable spending?

    Some cards do not have an annual fee, but many do. An annual fee is due around the same time each year. Over the course of a year, even if the fees are due at different times, the total cost can quickly add up. If this combined cost of owning several credit cards is becoming a financial pain point, you might have too many credit cards.

    How many cards can you use on a regular basis?

    By creating a budget, you can determine how many purchases and bills you pay each month. This number, when it's low, might make using all the credit cards you have difficult or inconvenient.

    On the contrary, having multiple credit cards may help if your lifestyle generates a high number of regular purchases. You could consider spreading purchases across all your available credit lines. This may keep credit card balances lower than they would be if you used one card for all purchases.

    What type of rewards do you want?

    You're probably familiar with the fact that many credit cards have rewards programs. A core benefit of those programs is that you can earn rewards on your credit card spending. To help determine how many credit cards you should have, review the rewards program of each card.

    Do you earn miles on several credit cards? Do some of your cards earn rewards on gas station purchases at the same rate? This sort of redundancy may not be a good justification for having multiple credit cards. 

    Can you cover the unexpected?

    Sometimes having multiple credit cards can be vital in a time of need. A very useful emergency fund is a combination of credit and cash from a checking or savings account. This combination strategy can help not only for a large, unforeseen expense, but also for situational emergencies like a car breakdown on a cross-country trip. If you'd like an emergency credit card, then a high credit limit and a low interest rate would be good features.

    Can opening too many credit cards impact your credit score?

    Getting a new credit card can affect your credit score, but that isn't always a bad thing. On the one hand, opening a credit card could cause a small, temporary dip in your credit score. On the other hand, opening new credit cards creates opportunity to lower your credit utilization.

    How a new credit card can hurt

    When you apply for a credit card, the lender performs a hard credit inquiry. This accesses your credit report and may cause your credit score to decrease for a short period. This effect on your score, however, can increase with each new credit card application, particularly if many inquiries are made in a short time.

    How a new credit card can help

    A new credit card account adds to your total available credit. How much of this credit you use or borrow impacts your credit utilization ratio. Therefore, a new credit card's credit limit adds to your total available credit and may decrease your credit utilization ratio right away. Low credit utilization can improve a credit score over time. However, your utilization will fluctuate as you borrow and pay on your credit lines, including a new credit card.

    Does the number of credit cards you own affect your credit score?

    The number of credit cards you own indirectly affects your credit score, but the number itself is not one of the several factors used to calculate your credit score.

    Having multiple credit cards can strengthen a credit profile, and their age and standing have significant effects. In general, having multiple credit cards and keeping all of them in good standing may bolster your credit profile.

    Regardless of how many credit cards you have, paying your credit card bill each month by the due date is important. This will help you maintain a positive payment history, which can maintain and improve your credit score. The amount of credit you utilize from month to month also affects your credit score.

    If you're interested in diving deeper into your credit score and creating good financial habits Chase Credit Journey® is an excellent tool. Credit Journey not only shows your payment history, number of cards and credit utilization, but it can also offer insights into how to improve credit score.

    Are 5 credit cards too many?

    Five credit cards may be too many for you, but it may not. You might find it easy to manage multiple cards and track everything that comes with them: benefits, due dates, balances, annual fees, etc. This still takes exceptional organization, even in a digital age replete with tech to make money management simple.

    Despite the challenges, managing multiple credit cards effectively is possible. However many credit cards you currently have, here are some challenges of managing 5 or more credit cards.

    Annual fees add up

    While many credit cards do not charge annual fees, certain cards do, and these fees are often justified by additional perks and rewards. Therefore, having to pay multiple credit cards generally means having to pay multiple annual fees. They range in amount, and the cost of all the fees added together can be high. 

    Organizing important details is more difficult

    Payment due dates, balances, interest rates and rewards are just some of the important credit card details to track. For example, failure to pay even a single bill on time can negatively affect a credit score.

    High available credit can cause overspending

    The more lines you have open, the more debt could accrue. Interest is typically charged on a credit card's unpaid balance. When interest accrues, the amount of debt across several unpaid balances can increase even more.

    Are 10 credit cards too many?

    Few who hold multiple credit cards have as many as 10, but it may be the ideal number for those few cardholders. Managing this many cards can have challenges, but here are strategies that someone who has 10 cards likely follows.

    Maintain a list of due dates

    This goes for monthly payments, which are due on a certain day of the month, as well as annual fees, which are due in a certain month each year.

    Use automatic payments

    These can help make sure that a monthly minimum payment is not missed. A positive payment history is good for maintaining and improving a credit score. It's usually possible to set up automatic payments to pay a statement balance in full, which could help avoid interest charges.

    Keep accounts open and active

    Usually, lenders consider a long credit history to be a good indicator of an applicant's credit health. The way you create a long credit history is by having lines of credit in good standing for many years.

    Avoid opening accounts to improve credit score

    It's true that new accounts can improve the credit utilization ratio by adding to someone's total available credit. However, applying for a credit card results in lenders performing a hard credit inquiry, which may affect the applicant's credit score negatively. For this reason, people with many credit cards might want to carefully choose when to submit new credit card applications.

    Budget and monitor balances

    The amount of credit that is used month to month affects the credit utilization ratio, an important factor in calculating a credit score. As a result, monitoring and paying the statement balances of multiple cards are important to managing multiple credit cards.

    In summary

    You'll have to judge for yourself the number of credit cards that is best for you. Important considerations include the total cost of annual fees and how likely you are to keep accounts open and in good standing. In general, managing multiple credit cards may create certain organizational and financial challenges for the cardholder. Yet, strategies like budgeting and monitoring accounts closely can make owning many credit cards enjoyable.

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