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.
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. Having very few accounts can make it hard for scoring models to render a score for you.
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.
You can own as many credit cards as you want as long as you are eligible for it. If you do not maintain the right credit utilisation rate, your credit score may be reduced. When you apply for a loan in the future, the number of credit cards you own may affect your overall repayment capacity.
Yet, financial advisors and credit experts say the typical consumer should have at least one card. “I would say two cards is optimum … and three would be maximum to keep finances simple,” said Cathy Curtis, a certified financial planner based in Oakland, California, and a member of CNBC's Advisor Council.
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.
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.
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.
Having a lot of credit cards can hurt your credit score under any of the following conditions: You are unable to keep up with your current debt. Your outstanding debt is more than 30% of your total available credit. You added too many cards in too short a time.
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.
In reality, the best credit utilization ratio is 0% (meaning you pay your monthly revolving balances off). But keeping your utilization in the 1% to 10% range should help improve your credit score, as long as the other aspects of your score are within reason.
Although the number of credit cards you have has little to no influence on your credit score, they can affect your credit in other ways. One of the reasons I earned an exceptional credit score in my 20s is because I learned which actions matter as far as credit scores are concerned.
Canceling a credit card can shorten the average age of all accounts, which can negatively affect your score. If your score has already dropped due to other negative items, such as late payments or large debt balances, it's probably best to keep the account open instead of closing it.
Credit experts advise against closing credit cards, even when you're not using them, for good reason. “Canceling a credit card has the potential to reduce your score, not increase it,” says Beverly Harzog, credit card expert and consumer finance analyst for U.S. News & World Report.
Keeping your credit utilization below 30% protects your credit score. But if you want to boost your score as much as you can, keep your ratio under 10%. FICO scores range from 300 to 850, and my score usually fluctuates between 820 and 830.
Depending on your situation, it may be wise to open credit card accounts slowly over several years. Opening multiple card accounts in a short period of time can actually hurt your credit score and can also jeopardize larger financial goals like getting a low mortgage rate when buying a house.
We recommend having at least two open credit card accounts. It's best for your credit score to keep your oldest account open, and you should be able to get an upgrade for everyday spending after a bit of credit building.
Individuals with a classic FICO score above 795 use an average 7% of their available credit. As your revolving debt climbs, your credit score will begin dropping — long before it reaches the recommended utilization limit of 30% of your available credit.
Most Americans have some credit card debt. A recent GOBankingRates survey found that 30% of Americans have between $1,001 and $5,000 in credit card debt, 15% have $5,001 or more in credit card debt and about 6% have more than $10,000 in credit card debt.
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.
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.
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.