With so many enticing bonus offers available for opening new credit cards, you might be wondering what’s to stop you from taking advantage of all of them. But before making space in your wallet for another card, you’ll want to consider how opening another account might affect your credit score and impact your spending habits.
The average American is carrying 3.1 credit cards, according to a 2017 survey from credit bureau Experian. But that doesn’t mean you can’t have more than that and still maintain healthy credit.
How many credit cards can I have?
Technically, there’s no limit to how many credit cards you can have. If you want to break the Guinness world record for the biggest assortment of valid cards, you’ll need to collect a whopping 1,498.
But the perfect number of cards for you will depend on your personal financial needs. It might be practical for you to carry a business credit card, premium travel rewards card, and cash back credit card — or even a few of each.
It’s not the number of cards, it’s how you use them
The number of credit cards you have isn’t as important as how you use them. If you pay your bills on time, keep your balances low, and always pay off the complete statement balance each month, you’ll probably maintain good credit health. But if you miss payments, overspend, or pay just the minimum amount each month, you’ll likely see your credit score start to decline. It’s important that you don’t open more accounts than you can reasonably manage.
Creditors may issue their own credit card limits
Though you could theoretically own as many credit cards as you like, card issuers may set their own limits regarding how many cards an individual can be approved for.
But many don’t have official rules capping the number of cards, and general guidelines aren’t typically set in stone or made public. Some issuers may deny your application if you already have too many cards, either from the same issuer or in your overall credit history, while others may cap your total credit limit across all cards.
While this rule is not officially posted, reports indicate that Chase will likely deny new credit card applications if the applicant has already been approved for five cards from any issuer in the past 24 months. This has come to be known as the Chase 5/24 rule.
Bank of America
Bank of America’s customer service representatives have indicated to applicants that an unofficial rule may limit the number of accounts that are approved as well. This has become known as the 2/3/4 rule, which states that you can only get two new cards in a two-month period, three new cards in a 12-month period, or four new cards in a 24-month period.
Bank of America also appears to have recently added a 24-month waiting period between opening two of the same type of Bank of America credit card in order to limit how often you can receive the same sign-up bonus — though exact rules may vary by card.
For American Express, it has generally been reported that one person can carry a maximum of five Amex cards. American Express also limits you to receiving one of each of the available welcome bonus offers in your lifetime.
Capital One, by contrast, is more strict about the maximum number of cards you can have (two) and the timing of your applications (one every six months).
There are always exceptions to the rules outlined above, but understanding each issuer’s general guidelines can help you avoid a hard inquiry on your credit report that only leads to a denied application.
5 factors to consider before applying for a new card
1. A higher credit limit could help your credit score
One of the factors impacting your credit score is your credit utilization ratio, which is a measure that determines what percentage of your total available credit you’re using.
For example, you might have a $1,000 total credit limit across your cards. If you put $400 of purchases on your cards, your credit utilization ratio will be 40%.
But if you open a new card with a $500 limit without spending any more, that pushes your credit utilization ratio down to about 27%. Since it’s generally recommended that you keep your credit utilization ratio under 30%, opening a new card might be a good idea if it will positively impact your ratio.
2. Applying for too many cards at once could hurt your score
When someone like a lender or credit card issuer pulls your credit report, it’s known as a hard inquiry. The effect of these inquiries on your credit is minimal — FICO estimates a reduction of less than five points in your score for most people — but if you apply for several cards at once, that could be enough to drop your score from “good” to just “fair.”
You can always check your credit yourself using a free service like Credit Sesame before you apply for a new card. Checking your own score is considered a soft inquiry, which won’t impact your credit score.
3. You’ll have more opportunities to earn more rewards
Different credit cards have varying rewards systems, and using them strategically can help you earn more points. For example, the Blue Cash Preferred® Card from American Express earns you 6% cash back at U.S. supermarkets (for first $6,000 per year, after that 1%) and on select U.S. streaming services, 3% cash back at U.S. gas stations and on eligible transit, and 1% cash back on other eligible purchases, so it could be a good card to pick up if you spend money in those categories frequently.
You could also earn sign-up bonuses when you open new accounts. The Chase Sapphire Preferred® Card earns you 60,000 bonus points if you meet the minimum spending requirement. That could be worth up to $750 in travel expenses when you book through the Chase portal. So if you’re planning a big trip, opening a new card could be a great way to get you there faster.
4. Having too many cards can make it difficult to manage your finances
More cards means more accounts to keep track of. If you don’t have a good system for budgeting and keeping track of payment due dates, you might end up missing a payment. To avoid this, you could take advantage of autopay options or use a budgeting app like Mint.
For some people, credit cards can encourage overspending, so if you think having another card will cause you to rack up debt, it may be better to not open a new account.
5. There’s no reason to have more cards than you need
There are only so many points you can earn from the money you spend, and if you already have a card or two with great rewards in your main spending categories, getting another one may not offer much extra value. There’s also a greater chance that one of your cards could end up lost or stolen, or that you’ll forget to use your older cards. If you let a card become inactive, the account could close, which could negatively impact your credit score.
In many cases, it’s a good idea to have more than one credit card, but the average person probably doesn’t need dozens. Consider your current credit score, spending habits, rewards goals, and other financial needs before opening a new account — and make sure your approval odds are good as well.
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Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening
5X points on travel purchased through Chase Ultimate Rewards®; 3X points on dining, select streaming services, and eligible online grocery purchases; 2X points on all other travel purchases, and 1X points per $1 on all other eligible purchases