Should You Apply For Multiple Credit Cards?

There are so many ways to get a new credit card these days. You might be offered one the next time you go to your favorite retail shop, and you’ve also probably received preapproved offers in the mail.

Having more than one credit card can have a lot of benefits, including boosting your credit score, as long as you time your applications well and maintain your credit cards responsibly.

Is it bad to apply for multiple credit cards?

Applying for multiple credit cards is not a bad thing, but it’s important to have a strategic approach. For starters, you want to make sure that the new card you’re applying for is adding something to your financial portfolio that you don’t already have.

Take a look at the credit cards you already have to see how you’re using them. Are your current cards helping you meet your financial goals? If not, then it makes sense to go forward with an application for new credit.

Whenever you apply for a new credit card, the card issuer will do a hard inquiry on your credit report to check your creditworthiness. This inquiry can lower your credit score, though the effect only lasts for a short while.

However, applying for multiple cards in a short period of time will trigger multiple inquiries and can be a red flag to card issuers. In fact, Chase has a rule known as the 5/24 rule. This rule states that, if you’ve opened five credit cards with any issuer in the last 24 months, you won’t be approved to open a credit card account with Chase.

If you plan to apply for multiple credit cards, it’s best to spread your applications out over a period of time. Try to keep your applications about three to six months apart. This will give your credit score time to bounce back from hard inquiries and give you time to see if you actually need another new card.

How does applying for multiple credit cards hurt your credit score?

Applying for multiple cards affects your credit score because each application triggers a hard inquiry on your credit report. However, the effect on your credit score doesn’t stop there.

Your credit score is broken down into five key factors — payment history, credit utilization, length of credit history, credit mix and new credit. The factors that have the largest impact on your credit score are payment history (35 percent) and credit utilization (30 percent). Both of these factors come into play after you have been approved for your credit cards but should be considered before moving forward with an application.

Payment history has to do with the payments you make on your accounts. When you pay even the minimum payment each month on your accounts, you are maintaining a good payment history. However, the likelihood of missing a payment can increase when you have multiple cards to manage. When you miss a payment, your credit score takes a hit. Missed payments can stay on your credit report for seven years, making it harder for you to get new credit in the future.

Credit utilization has to do with how much credit you have on all your accounts versus how much credit you use. When you have multiple credit cards, you will increase your available credit, which has the potential to improve your credit score. However, this is only the case if you keep your credit utilization low.

So, if you have a total of $10,000 of available credit, ideally you would only use $1,000 to $3,000 at any given time. If your credit utilization goes over that amount, your credit score could drop.

To gauge whether your card balances are dampening your credit score, check out Bankrate’s credit utilization ratio calculator and establish the next steps toward improving your financial opportunities.

Is it good to have multiple cards?

Having multiple credit cards can be very helpful. The key to being successful with multiple cards is making sure you budget for your purchases so you can keep up with your payments and keep your credit utilization in a healthy range. If you are able to use your multiple cards responsibly, you will see some very tangible benefits.

Benefits of having multiple cards

Here are three important benefits of carrying multiple credit cards:

• Earning a variety of rewards: Carrying multiple credit cards allows you to earn a greater variety of rewards — including cash back on grocery purchases, points on travel bookings and more.
• Access to more available credit: Having access to more available credit allows you to make more purchases, or larger purchases, without having to worry about going over your credit limit or hurting your credit utilization.
• Potential to improve your credit score: Provided you make your payments on time and keep your balances low, you may be able to improve your credit score. Since you’ll have more available credit, keeping your balances low (or at zero) can improve your credit utilization, which makes up 30 percent of your credit score. This can be especially helpful if you’re just starting to build up your credit and don’t have any other credit on your report, such as a loan or mortgage.

Risks of having too many credit cards

Having multiple credit cards can bring benefits, but it also comes with some risks. Here are a few things to consider before deciding to carry multiple credit cards:

• Increases the chances of overspending and debt: When you have multiple cards, monthly payments could become unmanageable. If you have cards that also have fees, the possibility of being overwhelmed increases. It is incredibly important to have a repayment strategy for your credit cards that is a part of your normal budget in order to avoid payment pitfalls.
• Getting poor value from your cards: Another risk is that you may not be getting the most out of the cards you have. Not using a credit card isn’t bad, but it’s important to benefit from the cards you own. There’s no point in paying an annual fee or having to keep track of another card payment when you’re not making the most of the rewards structure or travel perks that come with the card.
• Potential to hurt your credit score: As we’ve mentioned, having multiple cards requires you to stay more organized and takes more work. If you’re unable to keep up with your payments, or if your credit utilization rises above 30 percent, your credit score would likely take a hit. Additionally, if you decide to cancel a card that you aren’t using, it can affect your credit history — which makes up 15 percent of your credit score calculation.

How to apply for more credit cards

When applying for multiple credit cards, the first rule of thumb is to look at what you have to see what you might need to add. If you’re simply looking for more credit, check with your issuer to see if they can increase your credit limit first.

However, if a new card with different benefits is what you want, it’s time to do some research. Explore the best credit cards on the market and do some comparison shopping. Narrow down which cards you think will add the most benefits and check the criteria for approval. Then, check your credit report to make sure you meet the criteria before going forward with an application.

Once you’ve done this legwork, you’re ready to apply. If you’re looking to add multiple cards, remember to space out your applications. Don’t try to apply for multiple cards in one day. Instead, give yourself a minimum of three months between each application for a new card — and be sure to factor each new card payment into your budget so that you can keep on top of them.

The bottom line

Carrying multiple credit cards can be a benefit to both your rewards-earning strategy and your credit score. By carrying multiple rewards cards, you’ll be able to take advantage of rewards-earning opportunities that you may not get with one card alone. You’ll also have access to more available credit, which can help to improve your credit utilization ratio when used properly.

Of course, you should consider whether you actually need another card and whether you can handle multiple cards prior to applying for them. Be sure to space out your applications in order to help reduce the impact on your credit score. Typically, waiting at least three to six months is best.

Keep in mind, it’s important to stay organized and to make payments for all of your cards on time. Even better, try to pay each card in full and on time every month. Doing so can help you take full advantage of all the benefits that having multiple credit cards can provide.