How many credit cards should you have?
This is a frequently asked question. As long as credit scores exist, the impact of different choices will remain a true mystery to most people.
Money expert Clark Howard makes it clear that you should have at least two credit cards. Using multiple credit cards usually has benefits such as lower credit utilization and higher credit limits.
Therefore, we recommend using two or more credit cards. But is there a point where your credit card collection gets too big?
This is what a Clark Howard podcast listener asked recently.
Too many credit cards?
If you have 2 credit cards, what about 5? Or ten?
That’s what Clark’s listeners wondered on the January 6th podcast episode.
Gabriel of Iowa asked: “I am 19 years old and currently have 7 credit cards. I enjoy collecting them and have no plans to stop. Will winning the prize hurt me in any way in the long run? I’ve never done it and my credit score is in the low 700’s because of my credit limit.”
Gabriel is correct. When applying for a new line of credit, asking difficult questions will temporarily lower your score. As such, continually applying for new lines of credit can affect your numbers.
“Here’s where it gets interesting. Having all these cards means they have very low usage and show a broad ability to process credit, so it’s actually an advantage,” says Clark. says Mr.
If you’re a credit card rewards fanatic, having a variety of credit cards can help you maximize your cashback. But Clark’s Sticker Tricks can help you make sure you know which cards to use for travel, restaurants, gas, and other categories.
Another problem is that credit cards have started closing inactive accounts more frequently. So the more cards you manage, the harder it can be to remember that he makes transactions at least 3-4 times a year on each card.
The average age of all accounts also contributes to your credit score. So, if you’ve opened most of your credit lines recently, your score may drop.
Multiple Credit Cards: Where It Can Hurt You
As Clarke explains, there’s one case where stuffing every slot in your wallet with another card puts you in financial trouble.
“The only time this could hurt you is when you want to apply for a mortgage,” Clark says.
“Mortgage underwriters, seeing the huge amount of cards you have and the credit available, worry about you moving into the house and say, ‘Oh! You have to! Or you have to buy a 900″ TV. You have to buy a playset for your backyard.
“As such, mortgage underwriters may request that some of these lines of credit be closed.”
What credit score should I aim for?
Missing payments and accumulating large amounts of negative credit reports can limit the quality of loans you can get when applying for things like mortgages and auto loans. You can even rule out approvals entirely if your credit score is bad enough.
But many people with good credit scores worry about fluctuations above 10 points or obsess about keeping their scores comfortably above 800.
Clark says that as long as your score is over 760, don’t worry about that number. If that’s you, the short-term hit to your score by opening another credit card or feeling the need to increase your credit limit to boost your score is probably not worth stressing. is not.
Here are Clark’s seven rules for using credit cards.
final thoughts
Holding and managing more than 8 credit cards is not my hobby. But hey, to each.
If you’re the type of person who likes to maximize category-specific rewards and fiddle with credit limits, knock yourself out.
Know that you don’t need that many credit cards to maintain a healthy credit score or implement smart strategies.
