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Is it bad to have too many credit cards? Theres no right or wrong answer, but your credit score may be impacted. Learn more with this essential guide.
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Having a lot of credit cards with no balances can be helpful sometimes and dangerous other times. We will list the pros and cons so you can decide if it is a good idea for your money.
The Potential Benefits
Here are some potential advantages to keeping several credit cards open with no balances
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Improves Credit Score Carrying no balance relative to your total credit limit results in a lower credit utilization ratio This ratio makes up a significant portion of your credit score, so having cards with zero balances can boost your score
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Lengthens Credit History: Keeping old credit cards open, even if unused, can lengthen your credit history. The average age of your accounts is another factor in your credit score calculation.
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Provides Available Credit: Having access to more available credit from multiple cards gives you more flexibility in an emergency. It also keeps your utilization lower when you do use the cards.
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Deals Better Rewards: You might want to keep old cards that have better deals, rewards programs, or other perks open. You can use those benefits when you need to, even if you don’t use them often.
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No Effect When Not Used: Having open credit cards does not hurt your credit score, whether you use them or not. They can help you instead of hurt you as long as you don’t get into debt.
The Potential Downsides
However, there are also some risks to having multiple open credit cards, especially if you tend to carry balances:
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Higher Debt: It may be easier to spend more than you have available on more cards. Even if you have no balances on any of your cards at first, it’s easy to get into debt.
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Difficult Tracking: With obligations spread across many cards, it can be challenging to keep up with tracking balances, due dates, interest rates, rewards, etc. Missing payments is bad for your credit.
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Possible Hits to Credit Score: Applying for and opening many new credit cards over a short period can negatively impact your credit score. The total number accounts is a factor.
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Card Inactivity: If you don’t use a card for an extended period, the issuer may close it due to inactivity. This would shorten your credit history and lower your total available credit.
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Higher Chance of Fraud: The more unused credit cards you have, the more accounts that could potentially be compromised by fraudsters. It’s wise to monitor closely.
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Lost Rewards: If cards sit unused long enough, you may forfeit rewards points you’ve accumulated according to cardholder agreements. You need to redeem periodically.
The takeaway is that opening too many cards at once or letting them stagnate unused for too long can undermine the potential benefits. Moderation and attentiveness is key.
Tips for Managing Multiple Credit Cards
If you want to open several new credit cards or have a number of existing ones, here are some tips for making the most of them responsibly:
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Set up autopay or calendar reminders for every card to avoid missed payments and interest charges.
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Consolidate card tracking in one place rather than separately for better organization.
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Minimize card applications to avoid too many hard credit inquiries in a short timeframe.
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Use each card periodically to keep them active and maximize rewards potential.
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Redeem rewards and benefits regularly to avoid losing accumulated points or perks.
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Review statements closely every month to watch for fraudulent activity.
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Consider setting spend alerts and limits on purchases to avoid overspending.
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Monitor your credit regularly to see impacts of credit cards over time.
Overall, manage your cards strategically, use them prudently, and check your credit often.
How Many Credit Cards Is Too Many?
There is no magic number for how many credit cards provide maximum benefit without unnecessary risk. A general guideline is to open new accounts only as needed based on your spending patterns, rewards goals, and financial situation. Many experts recommend aiming for no more than 3-4 credit cards as a healthy range for most people.
Those with excellent credit and money management skills could potentially manage more open cards responsibly. But it’s generally wise to start small, open accounts slowly over time, and monitor impacts to your credit along the way.
Too many cards at once can lessen the positive effects and set you up for disorganization, higher debt, and declined credit scores. Move forward thoughtfully and attentively as you expand available credit.
Should You Close Old Credit Cards?
If you currently have numerous open credit cards, especially those sitting unused, you may wonder if you should close some. Here are some factors to consider when making that decision:
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How old is the credit card account? The older the better for your credit history.
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Does it have an annual fee? Cards with fees but unused are prime closure candidates.
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What impact would closure have on your available credit or utilization ratio? Don’t slash this drastically.
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Are you missing out on rewards by not using the card? Can you earn more with a different card?
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How many new credit inquiries would result from closure and replacement? Too many dings credit.
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Will you likely need this card’s credit line again in the future? Keep it open just in case.
Unless a card has an annual fee, is brand new, or you absolutely will not need it again, the best option is usually keeping it open. Just use periodically, redeem rewards, and monitor statements to avoid the risks of unused credit accounts.
Final Takeaways
The short answer is that having multiple credit cards open with zero balances can be beneficial, but only if managed prudently. The advantages revolve around improving your credit profile, while the disadvantages arise from misusing available credit.
Aim to open new accounts slowly over time as needed, use cards responsibly by not overspending, monitor them closely, maximize rewards potential, and check your credit score impacts regularly. With this measured approach, there is no set number of cards considered ideal or excessive for everyone. Find the right moderate range for your unique situation.
Does this card have a higher credit limit than my other cards?
A higher credit limit can boost your credit utilization score. But it also opens up opportunities for overspending.
Will I pay off this card in a timely manner to maintain a low credit utilization?
Above all else, be realistic about your financial situation. More credit doesnât always equal good credit. If you want to get a new card because the ones you have now are maxed out and you can’t pay them off, you may need to try a different method.
Answering these questions realistically and truthfully will help you decide if itâs the right time to open a new line of credit.
Itâs definitely not a good idea to open a new credit card if you:
- Have opened more than one credit card in the last six months
- Will have a hard time keeping their balance low and making payments on time.
- You shouldn’t think that the rewards and perks would help you.
- Getting ready to apply for big loans (like a mortgage or car loan) soon
Is it Bad to Have a Lot of Credit Cards with Zero Balance? | with Chris Naugle
FAQ
Is it good to have multiple credit cards with no balance?
A low credit utilization ratio is good, but if you have too many credit cards with no balance, it could hurt your credit score. If your credit cards have zero balance for several years due to inactivity, your credit card issuer might stop sending account updates to credit bureaus.
Is 7 credit cards too many?
There isn’t a magic number for “too many” credit cards, but seven credit cards could be too many for some individuals, depending on their spending habits and financial management abilities.
Is it good to have lots of empty credit cards?
Quick Answer. In general, keep unused credit cards open so you benefit from longer average credit history and lower credit utilization. May 27, 2024.
How many credit cards should I have for an 800 credit score?
“Three or four is a good number for a lot of people, but you can build credit with as little as one,” Rossman said. Research from Experian found U. S. consumers carried 3. 9 credit cards on average in 2023 — down from 4. 2 in 2017. But Americans with exceptional FICO scores — 800 to 850 — had 4. 8 credit cards on average.