Is it good to have lots of empty credit cards?
Quick Answer
There is no right number of credit cards to own, and owning multiple cards gives you access to different rewards programs that various cards offer. Owning five cards would give you a bigger total line of credit and lower your credit utilization ratio. If you can manage five cards at once, it's not too many for you.
Applying for multiple cards in a short amount of time hurts your score a lot more because it indicates that you're desperate to borrow. Over time, however, the positive information from having numerous credit cards with zero balance should counteract that initial decrease.
If you have one or more credit cards you rarely or infrequently use, there likely won't be a penalty fee or immediate ding to your credit score. However, a card issuer may choose to deactivate an inactive account eventually and in such a case, your credit score could take a hit.
Credit bureaus suggest that five or more accounts — which can be a mix of cards and loans — is a reasonable number to build toward over time. Having very few accounts can make it hard for scoring models to render a score for you.
Seven credit cards is not too many to have as long as you can handle the accounts responsibly, by paying the bills on time every month and keeping your credit utilization low. However, the average American only has about 4 credit cards, according to Experian, so having 7 is not typical and may be difficult to manage.
So, while there is no absolute number that is considered too many, it's best to only apply for and carry the cards that you need and can justify using based on your credit score, ability to pay balances, and rewards aspirations.
There's no set rule on how many credit cards are too many as it depends on several factors, like credit health, age, income, and utilization ratio. That said, having too many can negatively impact your credit health because keeping track of your payments can be hard.
It's generally recommended that you have two to three credit card accounts at a time, in addition to other types of credit. Remember that your total available credit and your debt to credit ratio can impact your credit scores. If you have more than three credit cards, it may be hard to keep track of monthly payments.
Yes, in theory you can have as many 0% interest credit cards as your heart desires, so long as your applications are approved. Whether or not that's a good thing for your credit and finances long term is another thing entirely.
What is the 30 credit card rule?
This means you should take care not to spend more than 30% of your available credit at any given time. For instance, let's say you had a $5,000 monthly credit limit on your credit card. According to the 30% rule, you'd want to be sure you didn't spend more than $1,500 per month, or 30%.
We recommend having at least two open credit card accounts. It's best for your credit score to keep your oldest account open, and you should be able to get an upgrade for everyday spending after a bit of credit building.
It's possible that you could see your credit scores drop after fulfilling your payment obligations on a loan or credit card debt. Paying off debt might lower your credit scores if removing the debt affects certain factors like your credit mix, the length of your credit history or your credit utilization ratio.
If you don't use your credit card, your card issuer can close or reduce your credit limit. Both actions have the potential to lower your credit score.
Your credit card balance is higher than usual
If your credit utilization went up — even if it's still below 30% — your score could drop. The fix: Pay down the high balances as soon as you can and return to using a small portion of your available credit.
To reach an 800 credit score, you'll want to demonstrate on-time bill payments, have a healthy mix of credit (meaning accounts other than just credit cards), use a small percentage of your available credit, and limit new credit inquiries.
You don't need all of these account types on your credit report, but you should aim to have more than one since a person with an 800 credit score has an average of 8.3 open accounts. But don't take out an installment loan just to raise your credit score.
Conversely, the lower your credit score utilization ratio, the better your credit score will be. To aim for an 850-credit score, keep your utilization rate below 5%. That means if you have a credit card with a $5,000 spending limit, your standing debt balance should never be above $250.
Key takeaways: Closing a credit card can hurt your scores because it lowers your available credit and can lead to a higher credit utilization, meaning the gap between your spending and the amount of credit you can borrow narrows. Canceling a card can also decrease the average age of your accounts.
Yes, assuming you use your cards responsibly. If you do, then having additional cards will generate consistent spending information for the credit bureaus each month, increasing your total credit limit and keeping your credit utilization rate low.
Is Capital One a good credit card?
But Capital One's cards are more than hype — they include generous rewards cards as well as excellent products for business owners, students and those with average or poor credit. What won't you find on any Capital One card? Foreign transaction fees.
Ultimately, the most efficient approach may be to tackle the credit card with the highest interest rate first, while still making minimum payments on the other card. Once the higher-interest card is paid off, you can then direct your focus and available funds toward the second card.
The general rule of thumb is that you shouldn't spend more than 10 percent of your take-home income on credit card debt.
