How many Credit Cards is too much? in 2021

By | August 29, 2021

How many Credit Cards is too much? You are asking yourself if you have many credit cards and are looking to open another. While as per CRED and CIBIL, the average Indian has four cards, you may have more than four cards or less.

Credit Cards are some of the most convenient and secure financial tools that are handy. They can be pretty helpful if you are making a sizable purchase like a new TV or other forms of electronics.

They are highly convenient while traveling since they may provide travel-related additional perks like Visa Concierge Services and Auto Rental Insurance. Similarly, in case of loss or theft of the card, you are covered with zero liability fraud coverage and free replacement.

There are many reasons to keep signing up for brand new rewards credit cards, and that’s true, albeit you already love those you have got.

After all, credit card issuers have constantly been rolling out new offers, including new credit cards with generous bonuses & Cashback Rewards you will be able to earn. Then there are spending incentives and changing benefits that may make older cards more attractive than before.

But you will encounter a problem if you keep on adding on new credit cards year after year. Suppose you possess numerous cards for purchases and want to maximize bonus rewards in various categories with each of them.

How many Credit Cards is too much
How many Credit Cards is too much

You may have to hustle and make a habit of keeping track of your spending’s and all various monthly bills. Moreover, having too many cards will increase annual fees, and benefits might seem to slim down.

How many credit cards are too many to have? Is it possible to possess numerous cards (or dozens of credit cards) without harming your finances? If you wonder whether the amount of credit cards you are having is normal, then this article is the one for you.

What’s Ahead

  1. Highlight
  2. How many Credit Cards should you have?
  3. What are the advantages of having Multiple Credit Cards?
  4. What are the disadvantages of Multiple Credit Cards?
  5. Does the number of credit cards impact my credit score?
  6. Bottom-Line: How many Credit Cards is too much?

Highlight

  • Even, If you pay off all credit card dues on time, it may hurt credit scores.
  • Too many credit cards in your credit history may look more potentially risky to Credit lenders.
  • If you close an older credit card, this may hurt credit scores as closing an older credit card decrees the Average age of credit history.
  • The new credit card may help you in decreasing your overall utilization ratio.

How many Credit Cards should you have?

There isn’t a magical number to this question since everyone’s situation is different. A strong argument can be made in favor of having at least one credit card to take advantage of the convenience, security, and other perks.

Justification for having more than one credit card may depend on whether you need an extra credit line to accommodate your monthly budget or if you seek to leverage your everyday spending to earn various forms of rewards which can be cashback, membership points, or airline miles.

Having credit cards in any number can be too much. Even two credit cards can be too much if you can not afford to pay your bills, you don’t need it, or you don’t plan to use it for a particular purpose. While having a new credit card can sometimes increase your creditworthiness, as it improves your credit score. Having a lot of cards within a short period is not advisable.

» MORE: Can You Get a Credit Card Without a Social Security Number in USA ?

Many Credit Card issuers even have rules in their practice to combat the phenomenon of having too many cards that have arisen with customers who try to play with the credit system by signing up for lots of credit cards to earn the bonuses and then cancel after meeting the expenditure requirements.

For instance, Chase has a policy termed 5/24, which does not approve your application if you have applied for more than five credit cards (regardless of credit card issuers) within the last 24 months (i.e., two years).

Another potential downside of having a plethora of credit cards is that it can make you too risky for lenders and lower your creditworthiness by reducing your credit score. Even if you have all your bills paid off, the mere fact that you have many open and available credit lines can make you look like a potential liability to the next lender.

What are the advantages of having Multiple Credit Cards?

There are several advantages of having multiple credit cards.

(1). Help keep Credit Utilization Ratio Low

If you have one single card and use it as much as 80% or above your credit limit, it will naturally bring down your credit utilization score.

(2). Helps build Credit Score

If you have numerous credit cards and still make all payments timely, you can build an excellent credit score. An excellent credit score increases your creditworthiness and gives you access to more credit opportunities.

(3). Increases Your Credit Limit.

If you have many credit cards, you as a cardholder have access to a higher credit limit. However, it would be best if you were responsible while using these cards.

(4). More Cashbacks and other forms of Rewards

Various Credit Cards give customers access to more card-related perks and benefits, which may be in the form of cashback and other rewards. Credit Cards offer you Cashback Rewards on all purchases you make, along with Travel Services, Purchase Protection, and Zero Fraud Liability Protection.

What are the disadvantages of having Multiple Credit Cards?

#1. You have more monthly payments to make.

Every time you acquire a new credit card, your monthly bills get more complicated. You will have additional payments to make with its due date to be remembered. If you miss payments, you might be charged late payment fees and might damage your credit score if unpaid.

#2. You pay too many annual fees.

It’s good to have all kinds of good credit card benefits, but these benefits usually come at a cost. The top credit cards with most perks typically charge you an annual fee ranging from $75 to $500. Annual fees might be worth it when you are getting more value than the card costs. You can reach the point where you are paying your annual fees for cards that you don’t use frequently.

#3.There is a great risk of Credit Card Debt.

As you possess more credit cards, you will have more available credit. Unfortunately, it is a responsibility that everyone does not handle well. Ideally, you should develop smart spending habits and follow them no matter how many credit cards you possess.

It is easy to fall into the debt trap of terrible debt habits when you have enough credit to spend lavishly.

#4. It’s harder to get approval for New Credit.

Having too many credit cards adds another hurdle to your Comfort of Credit which can be frustrating for you and is inevitable/ When you have too many cards, it starts getting harder to apply for a new card.


Lenders might see you as a significant risk if you have a high number of recent applications or new accounts. For instance, Chase usually denies any applicant who has already opened five credit cards or more within the last two months.

Does the number of credit cards impact my credit score?

Having multiple Credit Cards does not directly affect credit score. If you have more than one credit card, that means your credit utilization ratio will be low, which may increase your credit score.

However, having multiple Credit Cards the managing them can be complicated; you may also end up paying annual fees, late fees. Just ensure, if you have multiple Credit Cards, then pay off all credit card dues on time and use credit up to 30% of all Credit card limits.

Bottom Line: How many Credit Cards is too much?

There can be many benefits of having multiple credit cards, but you should manage them responsibly. To ensure profit maximization using credit card accounts, the first and foremost thing to do is be aware of the benefits each card offers, your credit limit per account, and payment dues, along with dates.

On the downside of the spectrum, if you have an outstanding debt is 25% or more of your total available credit, or you have added too many cards within a short period. It’s in your best interest to avoid applying for another credit card right now.

But talking about how many credit cards you should carry is a generic question, with subjective answers ranging from 2-3 or 5-6, or even more.

There isn’t an ideal number of how many credit cards you should have since the answer to this question is influenced by your spending habits and punctuality in paying your bills. Without an analysis of these things, you will be either end up buying lesser cards or more cards than the optimum range for you.

Moreover, for simplification, you should research the cards that offer you generous cashback rewards across various major purchases categories like Grocery, Gas Stations, Dine outs, Drug Stores, Travel, etc.

FAQ

  1. Is it bad to have a lot of credit cards with zero balance?

    Suppose you have more than one zero balance credit card. In that case, that may help you to lower your overall utilization ratio. Suppose you allow a credit card with a zero balance for too long. In that case, the issuer may close your account, which might negatively affect your score by reducing your average age of accounts.

  2. is it better to close a credit card or leave it open with a zero balance?

    It is generally true that canceling a Credit card can impact your score. My advice is to stay unused accounts with zero balances open. The rationale is that closing the accounts reduces your available credit, making it appear that your utilization rate, or balance-to-limit ratio, has suddenly increased.

  3. Is it better to close a credit card or let it go inactive?

    If you do not use the credit card for a year or more, then the credit card issuer might close your credit. If you do not pay credit card Annual fees, then closing an old credit card may not be a good idea.

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Author: Dhiraj Jha

I love to acquire, review, and earn reward points/cashback from Credit Cards for free traveling and enjoying luxury hotels. Helping people about the benefits and optimal utilization of credit cards.

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