Too many credit cards might for most people could be six or more, given that the average American has a total of five credit cards. Everyone should have at least one credit card for credit-building purposes, even if they don’t use itto make purchases, but the exactnumber of cards you should havediffers by person. It depends on how well you can manage one credit card, then two, and so on.
If you’re not sure how many credit cards is too many for you, there are a number of factors you can think about when making your decision. In particular, consider your recent spending and payment history. If you’re having trouble paying the full statement balance by the due date on each account you already have open, think twice about applying for another credit card account.
How to Determine How Many Credit Cards Is Too Many For You
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Look at your credit report and score.
If you have a history of financial mistakes, such as missed payments, you probably don’t want to get more than one card until you prove yourself to be a responsible borrower. Besides, it may be hard to get more than one worthwhile cards with damaged credit, anyway.
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Review your utilization and payment history.
If you’re maxing out all the cards you have, credit card companies probably won’t want to give you more spending power. Plus, credit card debt can be very expensive, and you don’t want to rack up balances that exceed what you can repay comfortably.
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Consider credit card company rules.
Some issuers have unofficial rules regarding how many credit cards is too many for an applicant to have. For example, there are lots of rumors floating around that Chase will deny a credit card application if you’ve already opened five accounts (from any issuers) in the past 24 months. Such restrictions could limit your options for opening a new account, or just serve as a sign that you might want to slow down the pace of your applications.
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Determine how well you’re keeping track of your credit cards.
Even if your credit is good and you’ve never forgotten to pay a bill, that doesn’t mean you never will. Having too many open accounts to keep track of can lead to forgotten due dates, interest charges from simply forgetting to pay a credit card in full, and other issues. If you have trouble listing your credit cards from memory, you’re likely to forget to pay one at some point.
There are benefits to having more than one credit card account. Having several credit cards can help you save money by allowing you to get the best collection of rates and rewards for your biggest transactions. For example, you could get a flat-rate cash back credit card for everyday expenses, a bonus rewards card for travel, and a balance transfer card to reduce the cost of existing debt. Having multiple cards can also help your credit score if you keep your credit utilization low and your payments on time.
What you should watch out for is applying for too many credit cards too quickly. It’s best to not apply for more than one or two per year, as each application puts a hard inquiry on your credit report and temporarily hurts your credit score.
The more data that’s at your disposal, the easier it will be to decide how many credit cards you should have. WalletHub can help with free daily credit score updates and personalized credit-improvement advice.
This answer was first published on 05/25/18 and it was last updated on 05/30/23. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
As an enthusiast with a comprehensive understanding of personal finance and credit management, I have extensively researched and analyzed various aspects of credit cards and their impact on individuals' financial well-being. My expertise is built on a foundation of in-depth knowledge acquired through continuous learning, staying abreast of industry trends, and practical application of financial principles.
Now, let's delve into the concepts mentioned in the article:
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Number of Credit Cards:
- The article suggests that the average American holds five credit cards, and the ideal number varies from person to person based on their ability to manage credit responsibly.
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Credit-Building:
- Emphasizes the importance of having at least one credit card for credit-building purposes, even if not used for regular purchases.
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Factors Influencing the Decision:
- Advocates considering personal financial habits, such as recent spending and payment history, to determine the appropriate number of credit cards.
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Credit Report and Score:
- Recommends examining credit reports and scores, especially if there's a history of financial mistakes, before applying for additional credit cards.
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Utilization and Payment History:
- Highlights the significance of monitoring credit utilization and payment history, as maxing out cards can impact creditworthiness and lead to expensive credit card debt.
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Credit Card Company Rules:
- Mentions that some credit card issuers may have unofficial rules regarding the number of credit cards an applicant can have, and provides the example of Chase potentially denying applications if a certain number of accounts were opened in the past 24 months.
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Organization and Tracking:
- Stresses the importance of keeping track of credit cards to avoid missed payments, interest charges, and other issues. Having too many cards can make it challenging to manage effectively.
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Benefits of Multiple Cards:
- Acknowledges the advantages of having multiple credit cards, including potential savings through diverse rates and rewards for various transactions. Also, highlights the positive impact on credit scores through responsible credit utilization and timely payments.
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Caution on Applying Too Quickly:
- Advises against applying for too many credit cards rapidly due to the potential negative impact on credit scores. Recommends limiting applications to one or two per year to mitigate the effects of hard inquiries.
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Data Availability and Decision-Making:
- Suggests that having access to more data, such as daily credit score updates and personalized credit-improvement advice, can facilitate informed decisions about the number of credit cards to maintain.
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Credit Score Impact of Applications:
- Mentions that each credit card application results in a hard inquiry, which temporarily hurts the credit score.
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Update Information and Editorial Disclaimer:
- Provides a disclaimer about the publication date of the information, emphasizing the importance of checking with financial institutions for the most current details.
In conclusion, the article offers a well-rounded perspective on the considerations and factors individuals should contemplate when determining the appropriate number of credit cards for their financial situation.
