How Many Credit Cards Is Too Many?

Whenever you start exploring bank cards, you’ll rapidly discover the perfect bank cards include extensively various provides. From journey rewards to money again and 0 p.c introductory annual share charges (APRs), it may be difficult to slim your selections.

The variety of bank cards you need to have varies by your distinctive monetary wants and preferences. In some instances, carrying a number of bank cards in your pockets daily is smart. In others, you’re in all probability higher off with a single main bank card that meets all of your wants.

Right here’s what it’s essential find out about having a number of bank cards and suggestions for the right way to most successfully pair them to maximise your rewards.

Is there such a factor as too many bank cards or too few?

No, there may be not a strict common restrict on the variety of bank cards that’s thought-about to be “too many” or “too few.” Your credit score rating received’t tank when you hit a sure quantity. For most individuals, having too many bank cards possible means you’re shedding cash on annual charges or having hassle maintaining with payments — and that varies from individual to individual.

In case you are effectively organized, you could possibly deal with 10 or extra bank cards and maintain monitor of their advantages, charges and funds with none drawback. If you happen to’re a frequent traveler and need to maximize journey bank cards prefer it’s your part-time job, then having an array of bank cards with completely different perks might even be extremely profitable. Some energy customers might have 20, 30 or extra playing cards of their family.

Ryan Flanigan, a bank cards skilled and author at Bankrate who has sufficient bank cards to fill a binder, suits this class. In relation to what number of playing cards he thinks is just too many, he says:

However not everyone seems to be keen to place within the time or vitality to turn out to be an influence consumer, and it’s straightforward to turn out to be overwhelmed with completely different bank card incomes charges, rewards applications, charges and cost due dates. Ted Rossman, a senior trade analyst at Bankrate, says he felt this manner when he was juggling six private bank cards and a enterprise card. About his resolution to simplify his bank card lineup, he says:

It’s high-quality to maintain issues easy with only a few playing cards. Nevertheless, having a skinny credit score file could make it tough for lenders to find out what sort of borrower you might be. Lenders usually view this as a threat. Plus, your credit score conduct can have a bigger impact in your rating if you solely have a couple of accounts. Consider it this manner: It’s a lot simpler to make use of up most of your total credit score restrict when you will have only a few playing cards, and doing so can hurt your credit score rating as a result of it implies that your credit score utilization will probably be excessive.

What number of bank cards ought to you will have?

Your supreme variety of bank cards is one thing you’ll have to find out by yourself. For reference, the typical American is reported to have between three and 4 bank cards. The place you fall in comparison with that baseline ought to rely upon the next components:

• Your means to handle cost due dates and repay your bank card balances month-to-month
• How snug you might be paying bank card annual charges (and when you’re getting vital worth in return)
• The variety of playing cards you may fairly use commonly for purchases
• The perks you will get with every one (with out paying for redundant advantages)
• The kind of rewards you need to earn and whether or not you need to earn a couple of kind of rewards foreign money

Are you a minimalist, a average or a rewards aficionado?

Our card consumer breakdown may assist you categorize your spending habits and resolve what number of playing cards it’s essential attain your monetary objectives:

The minimalist: 1-2 bank cards

One or two well-chosen bank cards needs to be a very good match for many who prefer to maintain it easy. If you happen to solely have one bank card or desire a starter card, we advocate selecting a no-annual-fee flat-rate money again card. You’ll earn a bit of money again on each buy and received’t have to maintain monitor of bonus classes or annual charges.

If you happen to really feel such as you’ve gotten the grasp of that, you may take into account including one other card to your pockets. With a brand new card, you may enhance your out there credit score, earn extra rewards and perhaps even rating a pleasant sign-up bonus. If you have already got a very good flat-rate card, we propose a card with bonus classes that match your spending habits — whether or not that’s journey, groceries, eating out or one thing else.

The average: 3-5 bank cards

Most individuals fall inside this class. At this level, you may in all probability earn rewards in all your main spending classes. Ideally, you’d have a wonderful flat-rate card (rewarding at the least 2 p.c money again or 1.5 factors or miles on all purchases) and two to 4 different kinds of playing cards that reward your most frequent purchases.

The rewards aficionado: 6+ bank cards

At this level, incomes bank card rewards typically turns into one thing like a pastime — a profitable one for a lot of. Some individuals’s bank card portfolios are effectively into the double digits. Take Luke Thomas, for instance, a public relations supervisor who opened 24 bank cards in eight years to construct wonderful credit score and fund his world travels.

However you received’t be capable to deal with two dozen bank cards except you get organized. As quickly as card particulars turn out to be tough to maintain straight in your head, create a spreadsheet or discover an app to assist monitor annual charges and cost due dates (if autopay isn’t an choice). You may additionally word bonus classes, sign-up bonus deadlines and every other perks. In any case, many premium bank cards are solely value their annual charges when you really use the advantages.

If you happen to’re searching for your first card (or wanting so as to add one other to your pockets), use Bankrate’s spender kind instrument to determine which of them may match up greatest along with your spending habits and life-style.

Does the variety of bank cards you will have affect your credit score rating?

All credit score accounts affect your credit score rating, together with bank cards. Whereas the variety of bank cards isn’t a particular credit score rating issue, getting a brand new card will affect your rating in each the quick time period and long run.

The way it can harm your credit score rating

Making use of for brand new bank cards can harm your credit score rating within the following methods:

• New playing cards trigger arduous inquiries: Whenever you apply for a bank card, a tough inquiry is positioned in your credit score report, and you might even see a brief drop in your credit score rating. Nevertheless, that ought to usually final for under round six months to a yr, assuming you retain your balances low and pay on time. Laborious inquiries stay in your credit score report for 2 years.
• You might have too many functions in a short while: “New credit score” makes up 10 p.c of your FICO credit score rating, which means that a number of new accounts and up to date inquiries will trigger your rating to lower. For the perfect approval odds and credit score rating, you need to wait 3 to six months between bank card functions.

The way it may help your credit score rating

Getting new bank cards can even assist your rating, nevertheless. Right here’s how:

• You’ll be able to decrease your credit score utilization: The quantity of debt you owe in relation to your credit score limits is called credit score utilization, and it’s the second most essential issue to your credit score rating (behind cost historical past). Decrease is best for this quantity, and opening a brand new bank card may help. Right here’s why: Let’s say you at present have two bank cards and their mixed credit score restrict is $10,000. If you happen to usually spend $1,000 between the 2 bank cards month-to-month, your credit score utilization is 10 p.c (1,000 / 10,000 = 0.10). If you happen to get a brand new card with a $2,000 restrict and proceed spending the identical quantity between the three playing cards, your ratio drops to about 8 p.c (1,000 / 12,000 = 0.083).
• You’ll be able to keep away from a skinny credit score file: If credit score scoring fashions have extra enter about your credit score utilization from a number of playing cards, they’ll higher assess your creditworthiness.
• The size of your credit score historical past will enhance over time: That is one other issue that goes into your credit score rating. It contains the typical age of your credit score accounts, in addition to the age of your oldest account. Having a couple of bank card can enhance the size of your credit score historical past over time.

For Flanigan, accumulating bank cards has positively helped his credit score rating through the years. “My credit score rating is the best it’s ever been,” he says. “The preliminary hit goes away rapidly.”

Nevertheless, these constructive results can solely occur when you use your bank cards responsibly, are cautious in regards to the timing of your functions and have good credit-building habits. “I’ve by no means missed a cost in my life,” says Flanigan, “and simply because I’ve a ton of playing cards doesn’t imply I’ll carry debt except it’s with an intro APR supply.”

When having a number of bank cards make sense

There are lots of conditions the place you may profit from a couple of bank card, particularly for rewards fans keen to get a number of bank cards from the identical card issuer.

Situations the place it might probably make sense to have a number of bank cards embody the next:

Disadvantages to think about about having a number of playing cards

All these causes apart, it’s essential to notice that a number of bank cards solely make sense for individuals whose funds are already organized and those that pay their bank card balances in full every month. If you happen to carry a stability and pay curiosity, these prices typically outweigh the worth of rewards and advantages. Additionally, when you apply for quite a few bank cards inside a quick time period, it might negatively affect your credit score rating, as talked about earlier.

When having one bank card is smart

If you end up confused on the considered carrying a couple of bank card, you’re definitely not alone. In any case, many customers favor the simplicity of getting one bank card and one invoice to take care of — particularly when one card meets quite a lot of wants and extra playing cards would simply make life extra difficult than it must be.

Listed below are some conditions the place you may want only one bank card:

For people who fall into the above classes, Flanigan provides this recommendation: “If you happen to simply need one card, ensure it provides you a stable base charge and has bonus classes. An indication-up bonus or intro APR supply wouldn’t harm both.” Selecting a card with top-of-the-line sign-up bonuses available on the market, plus rewards that match your spending habits, will help you get probably the most out of your bank card whereas nonetheless protecting your funds simplified.

Disadvantages to bear in mind when you will have only one card

Having a single bank card means your complete line of credit score will probably be decrease than with a number of playing cards, which might enhance your credit score utilization ratio. Moreover, you received’t be capable to faucet into a number of rewards applications provided by completely different playing cards. Additionally, you will have a thinner credit score file, and also you may end up in a foul place in case your card is misplaced, stolen or topic to fraud.

Nevertheless, if one card meets your wants and you’re feeling snug along with your credit score rating, you then shouldn’t really feel like it’s essential get one other card when you don’t need one.

The underside line

Solely you may resolve whether or not you will have too many bank cards, too few or simply the correct quantity. That will imply experimenting a bit to seek out the best quantity and mixture to your wants.

Begin with one or two bank cards and don’t be afraid to department out. Ensure you’re able to placed on the brakes, nevertheless, if you really feel you’ve hit your max. On the finish of the day, the appropriate variety of playing cards lets you maximize rewards and perks with out overcomplicating your funds.

Often requested questions (FAQs) about having a number of bank cards