How many credit cards is too many?

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Taking out your first credit card is a financial rite of passage. But what about your second credit card? Or your third? (Or your fifth?) It is possible to have too many credit cards, and it’s important to keep in mind that filling up your wallet could potentially hurt your credit score. The “right number of cards” is whatever you can manage and successfully pay off each month.

According to the credit scoring company FICO, cardholders with credit scores over 800 — the excellent credit score range goes from 740 to 850 — had an average of three open credit cards, but there’s a lot of room for variation.

There are a lot of benefits to carrying multiple credit cards, but there can also be some serious consequences. Instead of asking how many credit cards is too many, you should really be asking whether you’re using your current credit cards responsibly. 

Is there such a thing as too many credit cards?

Can you take out too many credit cards? Yes. Ultimately, whether or not you have too many credit cards all comes down to how — and why — you’re using each card. If you’re making purchases you can’t pay off, taking out multiple cards just to churn through bonuses or applying for new credit cards without asking yourself how those cards will help your current financial situation, you’ve probably got too many credit cards. 

Here’s an example: Let’s say that you have a cash back credit card and a travel credit card. You’re carrying revolving debt on both cards, which means you’re not paying your balance in full every month. Since you’ve got unpaid debt on both cards, you’re also racking up interest and slowly lowering your credit score as your debt-to-available-credit ratio increases.

Sound familiar? Now let’s say that you’re considering an airline credit card, maybe because you’re tempted by an attractive sign-up bonus. Since you aren’t paying off the debt you’ve charged to your current credit cards, taking out a third credit card would be one card too many.

That said, sometimes a new credit card can help you solve the problems you’ve gotten into with your current credit cards. A balance transfer credit card, for example, can help you pay off your current credit card balances during an interest-free window. 

How does having many credit cards impact my score?

Having multiple credit cards can help your credit score, as long as you use your credit cards responsibly and pay off your balances in full. 

Your credit score is made up of five components:

  • Payment history (35 percent)
  • Credit utilization (30 percent)
  • Length of credit history (15 percent)
  • Types of credit used (10 percent)
  • New credit inquiries (10 percent)

If you have many credit cards but pay off your balances regularly, you’ll have a strong payment history and a good credit utilization record — both of which will benefit your credit score. As time goes by, your length of credit history will increase, which also boosts your score. 

This is why people who use credit responsibly can often see their credit score increase when they take out a new credit card, even if they already have several credit cards. People who don’t use credit responsibly, on the other hand, might find themselves in even more financial trouble.

What are the risks that come with too many credit cards?

The biggest risk of having too many credit cards is getting yourself into debt that you can’t pay off. If you’re making purchases you know you can’t afford — or only making the minimum payment on your current balances — it’s all too easy to rack up some serious credit card debt before you know it.

Having too many credit cards can also hurt your credit score. The more credit cards you take out, the more monthly payments you need to make. If you miss a payment, you might get charged a small fee. If you let missed payments go past the 30-day mark, you can expect your credit score to suffer. If you’re already carrying a lot of debt on multiple credit cards, you probably don’t have a great credit utilization record, which means your credit score will drop even further.

What to do if you have too many cards

If you think you have too many credit cards, or can’t manage the debt you’re carrying on your current cards, you have a few options. 

First, you’ll want to work on paying off your credit card debt. There are many different ways to  pay off credit card debt; some people prefer to tackle the smallest debt first, while others prefer to start with the debt with the highest interest rate. Use Bankrate’s debt paydown calculator to determine the optimum debt repayment strategy for your current credit cards, interest rates and payment availability.

Some people use balance transfer credit cards for debt consolidation and repayment. Simply transfer your existing balances, and then use the balance transfer card’s zero percent intro APR period to pay off as much of your balances as possible, interest-free (a balance transfer fee will usually apply). Consider making a budget, both to help you pay off your current debt and to prevent you from getting into similar debt in the future.

Once you’ve paid off your debt in full, you might ask yourself whether you should cancel your credit cards. Canceling a credit card reduces your available credit, which can hurt both your credit utilization ratio and your credit score. If you cancel the oldest credit card you own, you’re also reducing your length of credit and letting your credit score take another potential hit. 

In many cases it’s a good idea to keep your credit cards active instead of canceling them. There are two situations in which it’s a better idea to cancel your cards: 

  • If a specific card comes with an annual fee you no longer want to pay
  • If carrying credit cards makes it too easy/tempting for you to go into debt

Things to consider before applying for more credit cards

Before you apply for another credit card, ask yourself why you want more credit. Are you looking for a specific benefit, such as rewards or miles? Do you want to increase your available credit and boost your credit score? Will your credit card get you perks like free checked bags or free shipping? 

Then, ask yourself how you’re managing your current credit. If you’re paying off your balances regularly, making all of your payments on time and building your credit score, you’re probably a good candidate for another credit card. If you have a history of late payments or revolving balances, taking out a new card might get you into more financial trouble. 

Ultimately, the question of how many credit cards you should have is up to you — but whatever credit cards you choose, make sure you use them responsibly.