Highlights:
- It's generally recommended that you have two to three credit card accounts at a time, in addition to other types of credit.
- Remember that your total available credit and your debt to credit ratio can impact your credit scores.
- If you have more than three credit cards, it may be hard to keep track of monthly payments. Missing payments can result in fees and lowered credit scores.
There's not a one-size-fits-all solution for the number of credit cards a person should own. However, it's generally a good idea to have two or three active credit card accounts, in addition to other types of credit such as student loans, an auto loan or a mortgage.
Just remember: The number of credit cards you own is less important than how you use them. Be sure that you can keep up with your existing monthly payments before considering a new credit card.
Is it good to have multiple credit cards?
Having multiple credit cards, along with other types of credit, can be a good thing, as long as you use each one responsibly.
Two factors that contribute to your credit score are the number and type of credit accounts. If your goal is to get or maintain a good credit score, two to three credit card accounts, in addition to other types of credit, are generally recommended. This combination may help you improve your credit mix.
Lenders and creditors like to see a wide variety of credit types on your credit report. Keeping up with multiple credit accounts suggests to lenders that you understand how credit works and know how to manage the amounts you borrow.
Many credit cards also offer borrowers access to special rewards programs. These might include cashback options for certain purchases, travel benefits or other types of rewards.
How multiple credit cards affect your credit score
Having multiple credit cards can indirectly impact your credit scores by lowering your debt to credit ratio—also known as your credit utilization rate.
Your credit utilization rate is the amount of credit you use compared to the total credit available to you. Lenders usually like to see a credit utilization rate below 30 percent. A rate higher than 30 percent may negatively affect your credit scores.
When you open a new credit card, you increase the total credit available to you. That means you'll be able to spend more before hitting that 30 percent credit utilization rate. If your rate is already at or above 30 percent, opening a new card could improve your credit scores by lowering your credit utilization rate.
However, the most important thing to do with multiple credit cards is to keep up with what you owe. Be sure to monitor how much you spend on each credit card and the payment due dates so that you don't go into credit card debt, pay high interest rates or get charged fees for missing a payment. It's also a good idea to pay off your credit card balances in full each month instead of only making the minimum payment.
Issues with having multiple credit cards
Despite the potential benefits, owning multiple credit cards is not without its downsides. The biggest risk is that you can easily spend more in credit than you're able to repay in cash. Plus, keeping track of multiple credit cards — all with different interest rates, due dates, minimum payments and other fees — can become overwhelming.
Additionally, charge offs, late payments and high credit utilization rates can create negative marks on your credit reports if you are not careful.
Before opening a new credit card account, be sure that you're ready for the additional financial responsibility. Keep an eye on your spending habits and find ways to organize your finances.
How often should you apply for a credit card?
It's true that keeping multiple credit cards can sometimes benefit your credit scores. But that doesn't mean you should apply for more credit than you can reasonably use.
When you apply for a new credit card, a lender will request a copy of your credit report from one or more of the nationwide consumer reporting agencies (Equifax, TransUnion and Experian) as part of the application. This process is known as a hard inquiry. Too many hard inquiries over a short period of time can be a red flag to lenders and lower your credit scores.
Why? Because applying for multiple credit cards may suggest that you're spreading yourself too thin and taking on more credit than you can reasonably repay.
Apply for a new credit card when you feel it makes sense for your overall financial situation.
How many credit cards are too many?
Owning more than two or three credit cards can become unmanageable for many people. However, your credit needs and financial situation are unique, so there's no hard and fast rule about how many credit cards are too many.
The important thing is to make sure that you use your credit cards responsibly.
Here are some things you should remember about credit, especially if you have multiple credit cards:
- Keep an eye on your balances.
- Avoid late payment fees by paying on or before the due date.
- If possible, pay off your credit card balances in full instead of only making the minimum payment.
- Check your credit reports frequently so that you see what lenders see.
With a free myEquifax account, you can check your Equifax credit report. You can get free credit reports at annualcreditreport.com.
FAQs
It's generally recommended that you have two to three credit card accounts at a time, in addition to other types of credit. Remember that your total available credit and your debt to credit ratio can impact your credit scores. If you have more than three credit cards, it may be hard to keep track of monthly payments.
What is the 3 15 rule for credit cards? ›
The 15/3 rule, a trending credit card repayment method, suggests paying your credit card bill in two payments—both 15 days and 3 days before your payment due date.
What is the ideal number of credit cards to have? ›
To prepare, you might want to have at least three cards: two that you carry with you and one that you store in a safe place at home. This way, you should always have at least one card that you can use. Because of possibilities like these, it's a good idea to have at least two or three credit cards.
Are 4 credit cards too many? ›
There isn't a set number of credit cards you should have, but having less than five credit accounts total can make it more difficult for scoring models to issue you a score and make you less attractive to lenders.
Is having 10 credit cards too much? ›
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.
What is the 2 90 rule for credit cards? ›
1-in-5 rule: This states that you can only apply for one American Express card every five days. 2-in-90 rule: You can only be approved for up to two American Express cards within a 90 day period.
What is the 5 24 rule for credit cards? ›
What is the 5/24 rule? Many card issuers have criteria for who can qualify for new accounts, but Chase is perhaps the most strict. Chase's 5/24 rule means that you can't be approved for most Chase cards if you've opened five or more personal credit cards (from any card issuer) within the past 24 months.
How to get 800 credit score? ›
Making on-time payments to creditors, keeping your credit utilization low, having a long credit history, maintaining a good mix of credit types, and occasionally applying for new credit lines are the factors that can get you into the 800 credit score club.
Is it OK to have 7 credit cards? ›
It's generally recommended that you have two to three credit card accounts at a time, in addition to other types of credit. Remember that your total available credit and your debt to credit ratio can impact your credit scores. If you have more than three credit cards, it may be hard to keep track of monthly payments.
How to get 850 credit score? ›
According to FICO, about 98% of “FICO High Achievers” have zero missed payments. And for the small 2% who do, the missed payment happened, on average, approximately four years ago. So while missing a credit card payment can be easy to do, staying on top of your payments is the only way you will one day reach 850.
The other risk of leaving a card inactive is the issuer might decide to close the account. If you haven't used a card for a long period, it generally will not hurt your credit score. However, if a lender notices your inactivity and decides to close the account, it can cause your score to slip.
Is it bad to have a lot of credit cards with zero balance? ›
However, multiple accounts may be difficult to track, resulting in missed payments that lower your credit score. You must decide what you can manage and what will make you appear most desirable. Having too many cards with a zero balance will not improve your credit score. In fact, it can actually hurt it.
Is it good to have credit cards you don't use? ›
Not using a credit card isn't necessarily a bad thing. However, it can come with some unintended consequences. Although charging inactivity fees is no longer legal, issuers have other options at their disposal — some of which could affect your credit score, your available credit and more.
Is a $10,000 credit card good? ›
If you're just starting out, a good credit limit for your first card might be around $1,000. If you have built up a solid credit history, a steady income and a good credit score, your credit limit may increase to $5,000 or $10,000 or more — plenty of credit to ensure you can purchase big ticket items.
Is cancelling a credit card bad? ›
Key takeaways: Closing a credit card can hurt your scores because it lowers your available credit and can lead to a higher credit utilization, meaning the gap between your spending and the amount of credit you can borrow narrows. Canceling a card can also decrease the average age of your accounts.
What is the 10 rule for credit cards? ›
The 20/10 rule of thumb is a budgeting technique that can be an effective way to keep your debt under control. It says your total debt shouldn't equal more than 20% of your annual income, and that your monthly debt payments shouldn't be more than 10% of your monthly income.
Does the 15-3 rule really work? ›
But despite what you may have heard, there's nothing special about the hack itself. Making multiple payments a month could help keep your balances low and avoid late payments, but there's no extra advantage if you do it 15 days or three days ahead of your statement date or due date.
Does paying twice a month increase credit score? ›
Your credit utilization ratio is only one factor that makes up your credit score, and making multiple payments each month is unlikely to make a big difference. One scenario where it might have an impact is if you have a relatively low overall credit limit compared to the amount of purchases you make each month.
Is it better to make two payments a month on a credit card? ›
If you typically carry a balance on your credit card from one month to the next, then making multiple payments during each billing cycle can reduce your interest charges overall. That's because interest accrues based on your average daily balance during the billing period.
What is the credit rule 35 30 15 10 10? ›
FICO Scores are calculated using many different pieces of credit data in your credit report. This data is grouped into five categories: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%).
