A borrower has too many credit cards when they cannot keep up with payments and can’t keep track of multiple balances. The right number of credit cards varies per borrower, because it depends on income, budget, and other factors.
In 2023, the average consumer credit card balance soared to $6,088.1 If you’re wondering how many credit cards is too many, you may already be struggling with credit card debt. Keep reading to learn how credit cards affect your credit score and if you should consider closing some accounts.
How Many Credit Cards Do Most Borrowers Have?
Are you worried about having multiple credit cards? If you want to achieve a perfect credit score, you may wonder if having too many credit cards is possible. What is the average number of credit cards a borrower has in the United States? According to Experian, the average American with a credit score has three cards.2
There is no exact number of credit cards you should have. However, if you currently have multiple cards, it’s critical that you can manage all of those credit card accounts. Suppose you repeatedly make late monthly payments because you can’t keep track of due dates. In that case, it’s time to consider closing or consolidating credit card accounts.
The Benefits of Having Multiple Credit Cards
Having more than one credit card can benefit your credit score and wallet. Learn how you can benefit from having multiple credit cards below.
Save Money on Purchases
Consumers can earn the following credit card rewards:
| Type of Reward | Description |
| Cash Back | Rewards are earned as a percentage of your purchases and given back as cash, which can be applied as a statement credit, deposited into a bank account, or redeemed for gift cards. |
| Points | Points are earned per dollar spent. They can be redeemed for travel, merchandise, gift cards, or sometimes converted to cash or statement credits. |
| Miles | Similar to points, but typically geared towards travel-related rewards. Miles can be redeemed for airfare, hotel stays, and sometimes other travel expenses. |
| Tiered Rewards | Rewards vary by purchase category. For example, a card might offer higher rewards for groceries and gas and lower rates for other purchases. |
| Rotating Categories | These cards offer higher rewards in specific categories that change periodically (like quarterly). Enrollment might be required to earn the bonus rewards. |
| Flat-Rate Rewards | A single, consistent reward rate on all purchases, regardless of category. Simple and straightforward, with no need to track changing categories. |
Depending on the credit card company, you may be able to earn additional rewards by using your card at specific places, such as gas stations or restaurants.
Increase Your Credit Utilization Rate
According to the credit score algorithm, credit utilization accounts for 30% of your total score. A credit utilization rate is the amount of debt you have compared to your credit lines. Multiple credit cards can increase your overall credit limit, positively impacting your credit report.
To calculate your utilization ratio, divide your total credit card balance by your total credit limit. Multiply the answer by 100 to get your ratio as a percentage. If your credit utilization ratio exceeds 30%, obtaining an excellent credit score will be incredibly difficult.
Improve Your Credit Mix
Credit mix accounts for 10% of credit scores. A diverse portfolio of multiple revolving and installment credit accounts can help boost your FICO score. Having more than one credit card can look good on your credit report. Lenders tend to view borrowers favorably when they can manage multiple accounts.
Reduce Credit Inquiries
Applying for new credit lines can have a negative impact on your credit score because the number of credit inquiries you make accounts for 10% of your credit score. Making more than six hard inquiries within one calendar year can decrease your score and limit your financial options. Multiple cards give you more money to spend, so you don’t have to apply for new accounts.
Who Should Avoid Multiple Credit Cards?
If you’re new to credit, prone to impulse spending, or currently struggling with debt, sticking to just one credit card might be better for your finances. It’s important to assess your spending habits and financial discipline before adding more cards to your wallet.
If you are thinking about closing a credit card account, take a moment to review your credit card situation and ask yourself the following questions:
- Are you comfortably managing your current cards?
- Do you pay off your balances each month?
If you’re facing high interest charges or struggling to repay your credit card debt, it might be time to reconsider how many credit cards you have. If you’re feeling overwhelmed, consider seeking help from a financial advisor. They can provide personalized advice on managing your credit cards and help you develop a strategy that aligns with your financial goals.
Does Closing Credit Card Accounts Affect Your Credit Report?
If you think you have too many credit cards, you may consider closing an account or two. But does closing a credit card account affect your credit report?
Closing a credit card account can negatively impact your credit score. Why? Account closures increase your credit utilization ratio by decreasing your available credit limit. If you use more than 30% of your available credit, your credit score can cause your credit score to fall by a few points. Having several credit card accounts can benefit credit scores because borrowers have a larger credit limit.
When you close an account, you also affect the length of your credit history. The longer you manage a financial account, the better your credit score will be. The length of your credit history accounts for 15% of your score. Suppose you want to close one of your oldest credit card accounts. An account closure can end up having a drastic impact on your credit score.
Managing multiple credit accounts can help you obtain and maintain a stable credit history.
But if you want to learn how to close a credit card, the first step is to finish paying off your current balance. Once your credit card balance is zero, ensure you cancel any recurring payments and check to see if you have rewards to claim. You can call the credit card company or cancel through your online account to initiate an account closure.
You will receive an electronic or paper confirmation that your account was closed. Keep an eye on your credit report to ensure the account’s status changes.
Should I Ask My Creditor for a Limit Increase?
When you don’t have enough available credit to spend, you may think about applying for a new credit card. But opening an account with a credit card company can decrease credit scores. To get approval for a new credit line, the creditor must complete a credit check, which deducts a few points from your credit score. If you want more money to spend, consider increasing your credit limit instead.
After opening a credit account, credit card issuers will monitor a borrower’s financial activity. Suppose you continuously make payments on time and keep a low credit card balance. In that case, you may unexpectedly get a credit limit increase after a few months. But if you have not yet received a limit increase, you can request one. Call the credit card company and speak with a customer service agent.
Card issuer’s grant limit increases for various reasons, such as:
- When a borrower’s income increases
- When a borrower has no missed or late payments
- When a borrower maintains a low debt-to-credit ratio
- When a borrower’s credit score increases
If you do not receive a credit increase, you can ask why. Typically, borrowers are denied a limit increase due to late payments, high credit balances, and decreased credit scores. If you already received a credit increase, it may be too soon to request another. Most credit card companies do not provide more than two annual credit limit increases.
Can My Credit Limits Decrease With Too Many Credit Cards?
Do you have so many credit cards that you don’t use all of them? When a credit card goes unused for an extended period, the lender may close it on your behalf. Account closures decrease your total credit limit, which can, in turn, lower your credit score.
The amount of time it takes for an inactive account to close varies depending on the financial institution. You may receive a notification through your online account or the mail before an account gets closed, but most borrowers do not. Credit card companies are not required to notify you before they close your account. The Credit Card Act of 2009 states that a lender must provide a 45 days notice of major account changes, but this does not include canceling an inactive account.
If your account gets closed but you want to keep it open, you can contact the credit card issuer. Your credit account may get reinstated if you had excellent payment history before the closure. Still, you may have to agree to another credit check.
How to Successfully Manage Multiple Credit Cards
In order to successfully manage more than one credit card, it’s essential to stay on top of payments. Most borrowers who struggle to manage more than one credit card cannot keep track of due dates and inadvertently miss payments. Your payment history is the most critical factor for credit score calculation, as it accounts for 35% of your total score.
Late payments can negatively affect your credit score and stay on a credit report for up to seven years. Consider signing up for automatic payments if you manually pay credit card bills online every month. When you sign up for automatic payments, you can choose how much on the due date. You can choose to pay the billing statement, the minimum, or the minimum plus an additional amount. You do not have to worry about missing payments or late fees since the payment amount is automatically withdrawn monthly.
You can call your credit card issuer to change the due date if you pay your credit cards on different dates. Having the same due date for multiple cards can make it easier to avoid missed payments. The only downside is that you may only have enough money to make minimum payments for multiple cards within the same week. Just ensure you make additional payments when you can to work on paying down credit card debt.
Understanding the Risks and Guidelines
Potential Risks of Having Too Many Credit Cards
Having various credit cards can be a double-edged sword. While they offer flexibility and rewards, there’s a risk of accumulating debt and negatively impacting your credit scores if not managed wisely. High balances and missed payments on several cards can lead to financial strain and make it harder to secure loans in the future.
Guidelines on Responsible Credit Card Usage
Responsible credit card usage is key to financial health. Experts suggest keeping your credit utilization low and paying off balances each month. It’s also wise to avoid applying for multiple new credit card accounts in a short period, as this can signal risk to lenders. Remember, it’s not just about how many cards you have, but how you use them.
Defining Excessive Credit Card Ownership
What constitutes ‘too many’ credit cards varies by individual. However, if you find it challenging to track your spending, struggle with high balances, or frequently miss payments, it might be time to reassess. A good rule of thumb is only having as many cards as you can manage responsibly.
Expert Advice and Management Strategies
Seeking Expert Opinions on Ideal Credit Card Numbers
There’s no one-size-fits-all answer, but financial advisors often recommend that you start with one or two and only increase if you can manage them effectively. There are financial websites and credit counseling organizations that offer insights from experts on balancing credit card numbers with financial stability.
Strategies for Managing Multiple Credit Cards
Managing multiple cards requires organization. Use budgeting apps to track your spending and set reminders for due dates to maintain a positive payment history. Also, be aware of the annual fees and how they fit into your financial plan. Sometimes, consolidating your debt onto a card with a lower interest rate can be a smart move.
Impact of Multiple Credit Cards on Credit Scores
Numerous credit cards can both help and hurt your credit score. On one hand, they can improve your credit utilization ratio—a key factor in credit scoring. On the other, mismanagement like late payments or high balances can harm your score. It’s all about how you manage them.
FAQs About Credit Cards
To assess your financial discipline with credit cards, review your credit card balances and payment history regularly. Are you consistently paying off your balance, or are you frequently carrying a balance from month to month? Your ability to pay on time and manage your spending reflects your financial discipline.
When managing credit cards with annual fees, weigh the benefits against the cost. Do the rewards, like cash back or travel points, justify the annual fee? Also, track your spending habits to ensure you’re maximizing the rewards offered by your credit cards.
To simplify managing numerous credit cards, consider using budgeting tools or apps that track all your credit card balances and due dates in one place. This can help you stay on top of your payment history and avoid missing a credit card bill.
Yes, having multiple credit cards can impact your ability to get quick cash loans or mortgages. Lenders look at your credit utilization and payment history on all your cards. Keeping low balances and making timely payments on all your cards can positively affect your credit scores, which is crucial for loan approvals.
Signs of over-reliance include maxing out your credit cards, struggling to pay the minimum amount, frequently applying for new credit card accounts, and using credit to cover basic living expenses without a plan to pay it off.
While there’s no one-size-fits-all answer, you can find guidelines on how many credit cards are ideal by considering your ability to manage multiple accounts without missing payments, your total credit utilization, and how each card complements your spending habits.
Evaluate if you’re able to effectively manage the credit cards you have. Are you keeping track of multiple payment due dates, maintaining low credit card balances, and not incurring late fees? If managing your current cards is overwhelming, it might be a sign you have too many.
Before closing unused credit card accounts, consider how it might affect your credit utilization ratio and credit history length. If it’s a card with no annual fee and a long credit history, keeping it open might benefit your credit score.
To manage multiple credit cards effectively, set up automatic payments to avoid late fees, monitor your spending on each card, and regularly check your credit card balances. Also, aligning payment due dates can simplify your monthly financial planning.
Having just one credit card can be simpler to manage, but having multiple cards can potentially improve your credit score by showing your ability to manage multiple lines of credit. The key is to maintain low balances and a solid payment history across all cards.
A Word From CreditNinja on Credit Card Management
The answer to the question, “How many credit cards is too many?” varies because everyone’s financial history is different. Having multiple credit cards is not a problem unless you constantly miss payments.
If you want to improve your spending habits and build good credit, check out the CreditNinja Dojo for additional information on credit card management. Learn how a debt consolidation loan works, if you should use a personal loan to pay off a credit card, and how to build credit without a credit card!
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