How Many Credit Cards Are Considered Too Many?
According to data from Experian, the average consumer in the United States has four open credit card accounts. However, there is no ideal number of credit cards that you should have.
Although everyone’s financial situation is different, there are some general guidelines that you can follow to determine whether opening a new credit card is a good idea.
The ideal number of credit cards varies from person to person. It all depends on your personal finances and how you manage each card.
For example, if you have just one credit card and utilize almost all of your available credit each month, you may benefit from opening more credit cards. By contrast, if you’ve opened multiple credit cards but are struggling to pay them off on time, it would not be a good idea to apply for additional lines of credit.
How Is Your Credit Score Determined?
Firstly, it’s important to understand the different factors that make up your FICO credit score.
- Payment History
- Credit Utilization
- Credit History
- New Credit
- Credit Mix
1. Payment History
This is the single biggest factor that impacts your FICO score, and represents 35% of your overall credit score. Payment history refers to a credit borrower’s reliability. Creditors want to ensure you’ll pay your bills on time. Late payments will hurt you, since credit card companies can be quick to report a late payment to the major credit bureaus.
2. Credit Utilization
This is the second biggest factor and makes up 30% of your total credit score. Credit utilization is the ratio of available credit compared to the amount you’ve spent.
If you use more than 30% of your credit limit on any given card, that’s considered to be a high credit ratio and can hurt your FICO score. For example, if your credit card has a credit limit of $10,000, you should aim to put no more than $3,000 on it each month.
Opening more credit cards may be helpful for lowering your credit utilization ratio, in some instances. If you find that you’re using more than 30% of your available credit on your current cards, opening another card could help you reduce that percentage.
3. Credit History
The longer your credit history, the higher your score. Your credit score takes into account how long you’ve had each account open. In a FICO study of people with excellent credit scores, the average age of each cardholder’s account was 8 to 11 years.
4. New Credit
New accounts comprise 10% of your credit score. If you submit too many new credit card applications at once, it’s likely that your score will be negatively impacted. This is because opening new credit cards will create a hard inquiry on your credit report. Hard inquiries remain part of your credit report for two years, but your score may bounce back in as little as six months afterward.
5. Credit Mix
It’s important to have a varied mix of accounts to show that you're able to manage your credit. Credit bureaus will reward you with a higher score if you have multiple accounts that you pay on time while maintaining a low utilization ratio.
Although using different types of credit can be a good thing, it may also hurt your score. Credit cards are considered one type of credit, so opening too many of them won’t actually increase your credit mix.
A variety of credit accounts could be a mix of credit cards, mortgage, student loans and auto loans. However, you should only open new credit accounts if you are confident in your ability to repay your debts.
Will Too Many Credit Cards Affect My Credit Score?
The total number of credit card accounts you have does not necessarily play a direct role in your overall score. However, having multiple credit cards can either hurt or help your score, depending on how you use them. (On a related note, having more cards can make it harder to prevent credit card fraud as thieves have more ways to access your account or target you with credit card scams.)
For example, if you open a rewards credit card that has a higher credit limit than your other cards and allows you to collect cash back on everyday purchases, this may boost your credit score - of course, that’s assuming you’re able to pay your bills on time and maintain a low credit utilization.
By contrast, if you open a lot of credit cards in a short period of time and manage them poorly, your score will suffer.
Is It Bad To Have a Lot of Credit Cards With Zero Balance?
Unfortunately, it can be. Keeping a low credit utilization ratio is good, but having too many credit cards with zero balance may negatively impact 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. With less credit activity on your report, lenders and other financial services companies may struggle determining whether or not you’re a responsible credit borrower.
Closing unused cards may also have a negative impact on your credit score. Closing your cards will shorten the length of your credit history, which may result in a lower score.
To prevent this from happening, it may be wiser to spend small amounts on the cards you use less frequently and then pay those credit card balances in full on their due dates. That way, your credit utilization rate will remain low, and you’re able to show lenders that you’re a reliable debtor.
Are There Any Benefits To Having a Lot of Credit Cards?
There are definitely some benefits to having multiple credit cards. Although it may sound counterintuitive, having more than one line of credit may help you better manage your spending habits by maintaining lower amounts owed per card.
Lowering your credit utilization rate by spreading your spending across multiple cards may help increase your credit score over time. Try lending preference to credit cards that offer perks like low interest rates, cash back incentives, rewards programs, travel rewards, airline miles, and exclusive deals from your favorite retailers.
Consolidating your debts via a balance transfer may enable you to pay off your credit card bills faster. A balance transfer lets you transfer your remaining balance from a high-interest credit card to one with lower interest. Some credit cards will waive the fees normally associated with a balance transfer as part of their introductory offer.
Having more than one credit card also means you’ll have a backup card in case one of your other cards is lost or stolen. Having extra credit cards can be useful to ensure that you always have a way to make a purchase in case of an emergency.
Am I Liable for Fraudulent Charges If Someone Steals My Credit Card?
A thief can use a stolen credit card to rack up unauthorized purchases in your name. If you report the theft after they’ve already used your credit card, you may be liable for the fraudulent charges to a maximum of $50, by federal law; however, there are no liability charges if you report the card stolen before it’s used.
Here are the FTC’s guidelines on fraud liability:
A stolen credit card will only impact your credit score negatively if you fail to report the unauthorized charges, and then don’t pay your credit card bill. You are always responsible for paying off your credit cards, unless you report the fraudulent charges and are able to prove they were unauthorized.
Can Someone Steal My Identity If They Have My Credit Card?
Credit card fraud is a major warning sign of identity theft, and it’s often the first step in a series of more serious identity-related attacks. Your physical credit card can be used to make unauthorized purchases in person and online. Thieves may also use your personal information to contact your credit card issuer to open more cards under your name, or shut you out of your account. Or, they could use your credit card information to order gift cards that can't be tracked or reversed (a scam known as carding).
If your credit card was stolen and you're concerned about identity theft, Aura can safeguard you from a financial disaster while protecting your entire family along with a $1,000,000 insurance policy for each adult family member.
Should I Monitor My Credit Report If My Credit Card Gets Stolen?
Yes, you should absolutely monitor your credit report if your credit card is stolen. Check your banking statements for signs of bank scams and to see if there are any charges you don’t recognize, and be sure to dispute them immediately with your credit card issuer.
Be sure to review your credit reports from any of the three national credit bureaus (Experian, TransUnion, and Equifax) to see if there are records of any loans or credit cards that you didn’t open.
If you discover anything suspicious, contact your credit card company and notify the credit bureaus to start a fraud investigation and get the account removed from your credit report.
For help with all of the above, Aura can monitor your credit and protect your finances.
Here's what you'll get with Aura:
- Credit Lock: Secure your credit from unwanted inquiries by locking your credit with Experian.
- Credit Scores & Reports: Keep track of your credit history with monthly credit updates and annual reports from the major credit bureaus.
- Financial Transaction Monitoring: Link your bank accounts and set alerts on spending activity to help detect the warning signs of fraud.
- Bank Account Monitoring: Get alerted if someone tries to add more account holders or remove your name from an existing bank account. Social Security number (SSN) monitoring for your children can also help prevent child identity theft.
- Lost Wallet Remediation: If your wallet is lost or stolen, we’ll help you cancel any debit or credit cards and work with you on a recovery plan to secure your sensitive information.
- $1 Million Identity Theft Insurance: Every Aura plan comes with an insurance policy that covers eligible losses due to identity theft.
How Do I Decide When To Open a New Credit Card Account?
While there are no steadfast rules about opening a new credit card, here is a general list of questions to answer before you open a new card:
- Will my credit score take a hit after submitting this new credit card application?
- Will I actually use the rewards and benefits this card offers?
- Does this credit card come with an annual fee that I won’t be able to afford?
- Does this new card have a lower interest rate than my other cards?
- Can I transfer my high-interest balances to this new card without paying a fee?
- Does this card have a higher credit limit than my other cards?
- Will I pay off this card in a timely manner to maintain a low credit utilization?
Answering these questions realistically and truthfully will help you decide if it’s the right time to open a new line of credit.
It’s definitely not a good idea to open a new credit card if you:
- Have already opened multiple credit cards in the past six months.
- Will struggle to maintain a low balance and make timely payments.
- Don’t feel that you would benefit from the rewards and perks.
What Are The Best Credit Cards for Consumers?
Not all credit cards are created equal—some offer great bonus points and rewards on everyday purchases, while others are ideal for travel. Here are some of our top credit card picks for consumers (and business owners).
- Chase Sapphire Preferred® Card
- Chase Freedom Unlimited®
- American Express® Gold Card
- American Express® Business Gold Card
- American Express Blue Cash Preferred® Card
- Citi® Double Cash Card
- Capital One Quicksilver Cash Rewards
Chase Sapphire Preferred® Card
Those who are new to the world of credit card spending and have been bitten by the travel bug may find their best credit card in the form of the Chase Sapphire Preferred® Card.
It offers some impressive rewards like:
- Consumers earn 5x points on travel.
- Consumers earn 3x points on dining.
- Consumers earn 2x points on all other travel purchases.
The Chase Sapphire Preferred® Card also boasts a general sign-up bonus with a rewards structure that’s easy for everyone to understand, plus a low annual fee.
It has an impressive welcome offer, too, as new cardholders can earn 60,000 bonus points after they spend $4,000 on purchases in the first three months of their account being open.
Chase Freedom Unlimited®
There’s also the Chase Freedom Unlimited® card, which is loved by consumers because of its $0 annual fee. It has pretty impressive perks, too, like:
- 5% cashback on grocery store purchases on up to $12,000 spent in the first year.
- 5% on travel purchases through the Chase Ultimate Rewards® card.
- 3% cashback on dining at restaurants and drugstore purchases.
- Unlimited 1.5% cash back on all other purchases.
It also provides customers with a $200 bonus after they spend $500 on purchases in the first three months from opening an account.
American Express® Gold Card
For the foodies out there, the American Express® Gold Card provides some serious perks on dining. If you find yourself always on the prowl for the newest restaurant (or love to cook at home), enjoy perks like:
- 4x points on dining at restaurants, including takeout and delivery.
- 4x points on grocery purchases at your favorite supermarkets.
- Up to 12 complimentary months of an UberEats Pass subscription.
This card is also great for those who want to travel, with 3x points on flights booked. It rewards consumers for spending, too, with a welcome bonus of 60,000 points after spending $4,000 in the first six months.
American Express® Business Gold Card
There’s also the American Express® Business Gold Card, which has perks that are geared towards high-spending small businesses. What sets this credit card apart from others is that the customer decides which category in which they will receive bonus points.
This card offers 4x points in the top two spending categories each month, in addition to 25% cash back on eligible flights booked using the card. So, if one month your highest category is advertising, and the next it’s shipping, businesses will still earn points in those categories.
Blue Cash Preferred® Card from American Express
Another great option from American Express is their Blue Cash Preferred® card, which is typically a great choice for everyday family purchases. The rewards that customers can enjoy on this card include:
- 6% cash back at supermarkets.
- 6% cash back on select streaming services.
- 3% cash back on taxis, rideshares, parking and trains.
- 3% cash back at gas stations.
- 1% cash back on other purchases.
Customers also enjoy a $300 statement credit after they make $3,000 in purchases with their new card within the first six months.
Citi® Double Cash Card
The Citi® Double Cash Card offers generous cash back rewards. Not only is there no annual fee, but users of this card will earn up to 2% cash back—1% when the purchase is made, and 1% when payment is made on the account. There’s also no limit on the amount of cash back that can be earned.
Customers love this card because it’s straightforward and there aren’t a lot of rules or exclusions that they have to remember.
Capital One Quicksilver Cash Rewards
Many consumers looking for a new credit card turn to the Capital One Quicksilver Cash Rewards card. This one offers low fees, high rewards, and low interest, plus no annual fee. Those who use this card earn 1.5% cash back on every purchase, so there are no exceptions to how a consumer can earn money back.
With a simple rewards program, a solid return, and no annual or foreign transaction fees, it’s a popular choice across the board.
Keep Control of Your Credit & Finances
There’s no such thing as a bad number of credit cards to have, but having more cards than you can successfully manage may do more harm than good.
On the positive side, having different cards can prevent you from overspending on a single card—and help you save money, earn rewards, and lower your credit utilization.
No matter how many credit cards you have, be sure to always make your monthly payments on time and monitor your credit report for suspicious hard inquiries. Remaining vigilant will help you build a better credit score over time while keeping your identity and finances protected.