How many credit cards is too many?

By , CardRatings Contributor

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Having plenty of credit cards won't hurt you, as long as you manage your personal finances perfectly. You'll have to judge whether the extra value you get from carrying so many rewards credit cards outweighs the hassle of keeping track of so many statements and payments.

Contrary to popular belief, most credit scoring algorithms measure how good you are at managing your debt, not necessarily how much debt you can afford to manage. Banks make those judgements on their own, based on the information from your credit profile. For instance, Capital One often tests new customers with lower credit limits, while Chase and American Express usually set the bar a little higher.

Underwriters for major credit card companies look at some key indicators when deciding whether you qualify for a new account:

  • Have you been late on any of your monthly payments over the past few years? While most banks may forgive a single late payment, chronic lateness suggests that you've got too much on your plate. Get your current accounts under control to qualify for today's best credit card offers.
  • Do you keep your accounts active by charging something on them every month? Just using your credit card for something trivial, like a pack of gum, can keep your account from falling into inactive status.
  • Have you maintained a low credit utilization across all of your accounts? Use just a fraction of your overall available credit, ideally don't use more than 10 percent of your total credit limits.

A fat wallet can lead to problems with your credit score, as well. Applying for new credit almost always leads to a temporary drop in your credit score. Likewise, closing out an account can rob your credit score of a few points, but only for a few months. Because your credit score can impact what you pay for insurance policies, home loans, and other personal finance services, avoid responding to credit card deals around the same time you're shopping for a house or for homeowners' coverage.


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