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.
How many credit cards is too many or too few? Credit scoring formulas don't punish you for having too many credit accounts, but you can have too few. Credit bureaus suggest that five or more accounts — which can be a mix of cards and loans — is a reasonable number to build toward over time.
There is no universal number of credit cards that is “too many.” Your credit score won't tank once you hit a certain number. In reality, the point of “too many” credit cards is when you're losing money on annual fees or having trouble keeping up with bills — and that varies from person to person.
There's no such thing as a bad number of credit cards to have, but having more cards than you can successfully manage may do more harm than good. On the positive side, having different cards can prevent you from overspending on a single card—and help you save money, earn rewards, and lower your credit utilization.
So, while there is no absolute number that is considered too many, it's best to only apply for and carry the cards that you need and can justify using based on your credit score, ability to pay balances, and rewards aspirations.
Yes, assuming you use your cards responsibly. If you do, then having additional cards will generate consistent spending information for the credit bureaus each month, increasing your total credit limit and keeping your credit utilization rate low.
Bottom line: Is it good to have multiple credit cards? Being a multiple credit card holder is good as long as you keep track of payments due, avoid overspending and maintain a low credit utilization ratio.
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.
Before you close a credit card account, consider the following: Closing a credit card could lower the amount of overall credit you have versus the amount of credit you're using (your debt to credit utilization ratio), which could impact your credit scores.
The 20/10 rule follows the logic that no more than 20% of your annual net income should be spent on consumer debt and no more than 10% of your monthly net income should be used to pay debt repayments.
Key Takeaways
Having too many open credit lines, even if you're not using them, can hurt your credit score by making you look more risky to lenders. Having multiple active accounts also makes it more challenging to control spending and keep track of payment due dates.
Multiple credit cards help you afford your everyday purchases but also your emergency expenses. You can rely on credit when you run into an unexpected expense, but with two cards you can prevent that large expense from hurting your credit score.
How many credit cards does the average person have? According to the latest figures from Experian, the average American has 3.84 credit cards with an average credit limit of $30,365.
While Americans carry an average of four credit cards, that doesn't mean four cards is ideal. It all depends on your situation. Credit card optimizers might be curious if there's a number of credit cards that's too many. Thankfully, there really isn't a one-size-fits-all answer.
Closing a credit card could hurt your credit score. Closing a credit card account could have a negative impact on your credit score. The main components of most people's FICO scores include payment history (35%), the amount owed (30%), length of credit history (15%) and types of accounts in use (10%).
Your credit card account may be closed due to inactivity if you don't use it. You could overlook fraudulent charges if you're not regularly reviewing your account. If your credit card account is closed, it could impact your credit score.
If the card you are cancelling has a high credit limit, it can raise your utilisation ratio and reduce your credit score. But if you are just closing the credit card to clear off your debt and get a better control of your finances, it may lead to a higher credit score in the long run.
It is better to keep unused credit cards open than to cancel them because even unused credit cards with a $0 balance will still report positive information to the credit bureaus each month. It is especially worthwhile to keep an unused credit card open when the account does not have an annual fee.
A good rule of thumb is to keep your credit utilization under 30 percent. This means that if you have $10,000 in available credit, you don't ever want your balances to go over $3,000. If your balance exceeds the 30 percent ratio, try to pay it off as soon as possible; otherwise, your credit score may suffer.
Whenever you do decide it's time to open a new card account, it's a good idea to wait at least 90 days between new credit card applications—and it's even better if you can wait a full six months.
2/3/4 Rule
Here's how the rule works: You can be approved for up to two new credit cards every rolling two-month period. You can be approved for up to three new credit cards every rolling 12-month period. You can be approved for up to four new credit cards every rolling 24-month period.
If your credit score lands between 300 and 579, it is considered poor, therefore lenders may see you as a risk. Here's how the FICO credit scoring system ranks credit scores: Poor: 300-579. Fair: 580-669. Good: 670-739.
There's no rule limiting how many credit cards you apply for. Some credit card companies have their own restrictions and will only let you apply for one of their cards within a set amount of time. If you're planning to apply for two cards from the same card issuer, check first to see if it has any rules like this.
The average adult has around 5 credit cards, including store credit cards, but there's no golden rule for how many credit cards you should have - or how many credit cards is too many. It depends on personal preference as well as your credit standing and organizational skills.