3 Reasons Not to Open Too Many Credit Cards at Once
by Maurie Backman | Updated July 21, 2021 - First published on June 3, 2021
Here's why it pays to wait between credit card applications.
If it seems like credit card companies are constantly coming up with new perks and reward programs, you're not crazy. These days, there's a lot of temptation to open new credit cards, especially when there are benefits like sign-up bonuses involved. But be careful -- you don't want to open up too many new cards at once. Here's why.
1. It could your hurt your credit score
Each time you apply for a new credit card, the issuer will access your credit history to see if you're a viable candidate for that card. And when that happens, it's called a hard inquiry on your credit. A single hard inquiry may only cause your credit score to drop by a handful of points. But the more hard inquiries you have, the more your score is apt to go down. And that could be a bad thing, especially if you're about to apply for a large loan, like a mortgage.
For more information, check out our resource on the difference between hard and soft credit checks
2. It could be a red flag to other lenders
A single hard inquiry might take your credit score down by five to 10 points. Multiple inquiries could double or triple that impact. But even if your credit score is very strong to begin with, applying for too many new credit cards at the same time could serve as a red flag to lenders. To them, it's a warning that you're about to overextend yourself or that your finances aren't stable and you need more credit to get by. And that's not a message you want to send.
3. You'll be even more tempted to spend
For some people, a new credit card is like a new toy that's just begging to be played with. And the more new credit cards you have on hand, the more apt you might be to use them. That could lead you to rack up credit card debt, which can hurt your credit as well as your finances in general. Furthermore, if you apply for multiple sign-up bonus credit cards at once, you might spend a small fortune within the same two- or three-month time frame trying to earn those rewards. And again, that could land you in serious debt.
Space out those applications
Tempted as you may be at certain points in life to open multiple credit cards at once, it's generally a bad idea. In fact, as a basic rule, you should make a point to wait at least 90 days between credit card applications, and if you can push yourself to wait 180 days, even better.
Spacing out your applications will make it easier for you to:
- capitalize on sign-up bonuses
- avoid overspending
- preserve the credit score you've worked hard to build
And if you're worried about passing up a great offer, fear not. Credit card companies are constantly putting out new promotions. So if you miss out on an offer this month, there will probably be an equally good one to look at six months down the line.
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