Everyone’s been there. You are standing at a checkout counter when the clerk tells you that “today only” you can get a great discount on the purchase you are making. All you have to do is open an account for a great new credit card. Of course, you want 40% off, who wouldn’t.
Or maybe you check the mailbox and discover you’ve been pre-approved! Get this great new card loaded with rewards and perks. Who doesn’t love mail telling them how awesome they are?
With all of the options out there, who hasn’t wondered, “Is it good to have multiple cards?” or “Will this hurt my credit score?”
How Too Many Cards Can Hurt You
Having too many credit cards can hurt your credit score.
- Some creditors might think you are a risk if you have too many open lines of credit. This is particularly true if you carry a significant balance from month to month.
- Too many accounts that you are regularly using can make it more challenging to manage your spending. Having your purchases split between multiple cards can also make it more challenging to follow your ideal budget.
- You can quickly lose track of when each payment is due. Late payments can be particularly harmful to your credit as 30% of your score is depends on making payments on time.
- It is much too easy to use “too much” of your available credit. If your overall credit utilization goes up over 30%, your credit score will begin to drop.
- Applying for too many cards too quickly can also hurt your credit. Every time a new hard credit inquiry appears on your report, it affects your score. Those hard inquires stay on your account for 12 months.
- Often once you realize you might have too many accounts, it is easy to be tempted to close one or two of them. Closing accounts can also damage your credit, particularly if you close the accounts you have had the longest.
How Multiple Can Help
Of course there, are ways that having multiple cards can help. Receiving a new credit line increases your total of available credit and can improve your overall credit utilization.
Having multiple cards can also increase the amount of credit you have available to use when an emergency arrives or can even be a big help when you need to make a big purchase. In fact, it is always a good idea to purchase big-ticket items with a credit card so that you can take advantage of any cashback perks you might have.
There is no concrete answer to this question. Ultimately how you manage your credit will always be far more important. It is possible to keep a good credit score no matter how many accounts you have.
Any time you are considering opening a new account, you should have a solid plan for exactly how to use that card.