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by Lyle Daly | Updated July 21, 2021 - First published on Jan. 8, 2020
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Having a lot of credit cards has its perks -- but it's not all plane sailing.
With the array of benefits that the best credit cards offer, it's tempting to sign up for every card that you like. More cards mean you can get more sign-up bonuses, earn extra rewards in additional spending categories, and take advantage of even more perks.
That's been my strategy, and at this point, I have over a dozen credit cards. Although you can get substantial value this way, there are also drawbacks to be aware of before you start opening multiple cards per year.
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Every time you add a credit card to your wallet, you make your finances more complicated. You have another bill to pay, which makes a missed payment more likely (although you can mitigate this risk by setting up auto-pay). It's also another account that you need to monitor for fraud.
When you have one or two credit cards, you probably won't have much trouble. But with more, it becomes much more of a challenge to manage all those accounts. Any missed payments or other mistakes can cost you money, too, so you should only take on this kind of responsibility if you know you can handle it.
My biggest annoyance with having so many credit cards is that it has become significantly harder to get approved for new ones. Quite a few credit card companies now deny applications because the applicant either has too many credit accounts open already or because they've applied for too many cards recently.
If you're used to getting your applications easily approved because you have a good or excellent credit score, be prepared for that to change as your number of cards increases.
Many of the credit cards with the most perks, and especially the most popular travel cards, carry annual fees. It's easy to justify paying an annual fee for a card if you use it frequently and get a lot of value from it. When you have multiple cards with annual fees, then you need to carefully weigh whether you're using them all enough to make those fees worth it. And even if the answer is yes, it can still get expensive.
One advantage of having multiple credit cards is that you can earn more rewards on your purchases. For example, you could combine one card that earns a solid flat rate on all your spending with cards that earn higher bonus rates on specific categories, such as grocery stores, travel, dining, and gas. It's a great way to increase the amount of cash back or travel points you earn.
The downside is that to earn those extra rewards, you'll also need to know which card to use for which bonus category. That can lead to situations where you're standing at the register trying to remember which of your many cards will get you the most rewards.
The number of credit cards you have doesn't affect your credit score, but there are still a couple of ways that having lots of credit cards can hurt your credit.
The average length of your credit history is a factor used to calculate your score. If you open several new credit cards, it will decrease that average account history length.
Another factor that impacts your credit score is new credit inquiries, which includes the hard credit inquiries that occur whenever you apply for a credit card. If you apply for several credit cards, you'll have multiple hard inquiries on your credit file, thus bringing down your score.
There's nothing wrong with carrying multiple credit cards, and in fact, it can be a smart strategy for some consumers. But it also means you'll have more risks and complications to deal with, so you should err on the side of caution. Start slow, and if you feel like you can handle more, do it one card at a time.
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