What are your financial priorities?
Answer a few simple questions, and we’ll direct you to the right resources for every stage of life.
Reset menu
- Introduction
- How you can benefit from multiple credit cards
- How multiple cards can raise your credit score
- How multiple cards might hurt your credit score
- Tips on managing multiple credit cards
Save
Close save Save
Saved to My Priorities
It all depends on your finances, lifestyle and goals. Here’s a rundown of some of the factors you’ll want to consider.
Read, 4minutes
The average American is the proud possessor of four credit cards—that’s according to Experian, one of the three major credit bureaus. There can be sound reasons for keeping multiple cards. It can give you greater flexibility by offering more choices when you’re making a purchase. You can also tap into a greater variety of credit card rewards and special offers. And—if managed responsibly—multiple cards can actually help your credit score.
On the other hand, it can be harder to keep track of numerous cards, which can lead to overspending and missing payments—and damage to your credit score. As you think about how many cards might be your right number, here are some things to keep in mind.
How you can benefit from multiple credit cards
Convenience is a big reason for keeping multiple cards. By using different accounts for different purposes, you may find it easier to stick to a budget. Having a dedicated card for online shopping, for instance, can enable you to track spending and keep an eye out for identity theft or fraud. In addition, a separate card kept in reserve can provide backup if your primary card is lost, stolen or misplaced.
Another reason to add a card is to take advantage of special offers such as low introductory interest rates for balance transfersor rewards such as miles or points. A credit card issued by your favorite store might give you the best benefits when you shop there, but for purchases anywhere else you might prefer a general-use card with travel rewards to earn points toward your next vacation.
How multiple cards can raise your credit score
When used wisely, credit cards can help you build a strong credit report, which provides a snapshot of your financial life to lenders, employers, insurers and landlords. Your credit report lists credit cards along with mortgages and auto, student and other loans. It also shows the age, payment history, balance and credit limit for each card.
A credit report with fewer than four or five accounts is considered a “thin file” by the industry, and it may be considered insufficient to provide a reliable gauge of your ability to repay loans. As a result, lenders might require a higher down payment or interest rate, or might even decline your loan application.
How multiple cards might hurt your credit score
Your credit score is a numerical valuebased on the information in your credit report. Payment history and amounts owed are the two most important components. A good history of both on multiple cards can boost your credit score.
However, as you add cards, managing them can become more difficult—you might be more likely to make late payments, miss them altogether or accumulate a high level of debt. Any one of these can quickly bring down your score, which may in turn mean you’ll face higher interest rates, miss out on credit card rewards or even have trouble getting new loans.
Show text version
Close text version
What goes into a credit score
35% Payment history
30% Amounts of available credit used
15% Length of credit history
10% Types of credit
10% New credit
Source: FICO
Tips on managing multiple credit cards
These practices can help you get the greatest benefit from multiple cards while maintaining a healthy credit score:
Payments
Nothing is more important than paying on time. Through mobile and online banking, you can set up automatic payments and reminders to help manage multiple due dates. It’s always best to pay your card balances in full every month to avoid interest charges. If you can’t pay off the balance completely, make at least the minimum payment on each card and as much more as you can.
Quick tip
If you’re making only the minimum payment on each card, you might want to reassess your spendingand consider strategies to pay off your credit cards.
Amounts owed
Be careful not to use your additional credit cards to go deeper in debt. Lenders prefer that you use less than 30% of your credit limit. This applies to each card individually, and to all your cards added together. Your credit score could take a hit if the balance on just one card is more than 30% of that card’s limit—even if the total balance on all your cards is less than 30% of the total credit limit.
Length of credit history
Leave older cards open and use them occasionally to prevent them from becoming inactive. This will give you a longer credit history and higher overall credit limit, both of which are helpful to your credit score.
Credit inquiries
Be judicious when it comes to applying for new cards. Applying for several cards within a short time can negatively affect your credit score. Each application triggers a hard credit checkthat’s recorded on your credit report and may make you look riskier to lenders.
Quick tip
If you’re planning to buy a car or a house, it’s a good idea to avoid applying for new credit cards for at least six months.
Multiple credit cards won’t necessarily harm your credit score. In fact, under the right circ*mstances, they can improve it. The key is to use your cards strategically, pay on time, keep an eye on how much credit card debt you’ve got and—perhaps most critically—don’t let the availability of credit alter your budget.
Disclaimer
Close Disclaimer
The material provided on this website is for informational use only and is not intended for financial or investment advice. Bank of America Corporation and/or its affiliates assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment management. ©2023 Bank of America Corporation.
What to read next
More from Bank of America
Contact Us
-
We're here to help. Reach out by visiting our
Contact page or schedule an appointment today. -
Schedule an Appointment
FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries.
Mobile Banking requires that you download the Mobile Banking app and is only available for select mobile devices. Message and data rates may apply.
As an expert in personal finance and banking-related matters, I've amassed a deep understanding of various financial concepts and practices through years of experience and continuous learning. My expertise includes knowledge about managing credit, budgeting, banking operations, debt strategies, privacy and security measures, taxes, investing, homeownership, and financial milestones.
The provided article delves into the realm of credit management, specifically discussing the advantages and potential drawbacks of having multiple credit cards. Here's a breakdown of the concepts touched upon in the article:
-
Credit Cards and Their Impact on Credit Score: The article explains how having multiple credit cards can impact an individual's credit score. It highlights the importance of credit utilization, payment history, and managing various accounts to maintain a good credit standing.
-
Benefits of Multiple Credit Cards: It discusses the potential advantages of holding multiple credit cards, such as greater flexibility, access to different rewards programs, and enhanced convenience for budgeting and tracking expenses.
-
Credit Score Management: The article explains how credit scores are calculated and how different factors such as payment history, credit utilization, length of credit history, and credit inquiries can affect credit scores. It provides tips on managing multiple credit cards to maintain a healthy credit score.
-
Strategies for Managing Multiple Cards: Practical strategies for handling multiple credit cards effectively are outlined. These strategies include making timely payments, monitoring credit utilization, maintaining older cards for a longer credit history, and being cautious about applying for new credit cards frequently.
-
Bank of America Services: The article also mentions various services and resources provided by Bank of America, such as tools for financial planning, educational resources, and a range of banking and financial products.
-
Expert Advice: Lastly, there's a disclaimer emphasizing the informational nature of the material and advising readers to seek personalized financial advice from professionals when making significant financial decisions.
Overall, the article offers comprehensive insights into the nuances of managing multiple credit cards, their impact on credit scores, and practical tips to optimize their use while avoiding potential pitfalls.
