May 28, 2024

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How Many Credit Cards Is Too Many? | BankBazaar

4 min read

Be it Credit Cards or coffee, too much of anything is bad! If you’re addicted to applying for Credit Cards, then this article might just be the antidote that you’re looking for.

Swiping a Credit Card is as cool as sporting the best shades or shoes in the market (at least for me). Paying with a Credit Card has an air of sophistication to it. With all due respect, debit cards and payment apps are fine, but Credit Cards give a sense of exclusivity to proceedings. Like you walk into a bar, and the bartender knows you.  
But for some, this fascination turns into an obsession and before they know it, they would’ve got cards from every other bank. It may be smooth sailing at first, but with a new card added to the mix every now and then, it may become a lot to manage. So, how many Credit Cards should you get and where exactly does one draw the line between need and obsession? Here’s our take. 
Just Enough to Space it Out! 
We’re impulsive beings. With Credit Cards now available at nominal fees, the urge to apply is often high. You should NOT go gung-ho, but rather keep it calm. This is because applying for a new Credit Card lowers your Credit Score a bit as a hard enquiry is initiated by providers. Therefore, applying for too many cards in too little time could result in a serious dip in your Credit Score. So, as a rule of thumb, let’s give it six months between Credit Card applications, all right? Also, Credit Card issuers view multiple card applications in quick succession as a sign of financial distress. It raises a few brows of concern on your ability to make future payments and keep your accounts in good standing. 
Additional Reading: Tips and Tricks For Handling Multiple Credit Cards 
Just Enough to Maintain the Golden Ratio 
Golden ratio? We’re talking about credit utilisation ratio here, my friend. It is the percentage of a borrower’s total available credit that is currently being used. Somewhere between 10-30% is what the doctors recommend but hear us out. A new Credit Card increases your credit limit. If there is no corresponding increase in your monthly spend, then your credit utilisation ratio will go down. However, getting too many Credit Cards could take your credit utilisation ratio to the depths that you don’t want it to go. So, slow down, evaluate your regular monthly spends, and only if you absolutely need it, apply for your next Credit Card. 
Just Enough to Maintain a Healthy Credit History 
More on the topic of being impulsive, an increased credit limit (with the entry of a new Credit Card) might just prod you to live life a bit dangerously, tempting you to spend a little more. This ‘little more’ on every card that you own might eventually add up to an unsurmountable due in one of those months, which could be difficult to pay off in full. Before you know it, your Credit Score takes a hit, and your credit history that took years of effort to build is at danger. Not just that, getting a new Credit Card can also lower the average age of your credit history. With newer credit accounts, you won’t have a long credit history to exhibit your financial diligence, and as a result, your Credit Score may suffer. 
Additional Reading: Unleashing Your Inner Wednesday Addams: A Guide To Choosing The Right Credit Card 
Just Enough to Manage Your Finances Wisely 
You see new-gen financial influencers dishing out financial advice and how they use this card for travel, that card for dining, and so on. But let us tell you this, what works for others might not work for you and vice versa. Understand your money management style and get only what you want. A new card might be in vogue, might have the greatest benefits, but what if it disturbs a system that you have been following for years? More Credit Cards mean more due dates to remember, which subsequently increases the chances of you missing a payment. So, it’s paramount that you have a system that works and then you may apply for cards that truly add value to that system! 
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