The Motley Fool
My Wallet Hero

How many credit cards is too many?

There are a lot of credit cards on the market. Which means that it’s not all that surprising for someone to find themselves with more than one in their purse or wallet. Having multiple credit cards can allow them to capitalise on various rewards, balance transfer opportunities and 0% interest deals that are on offer.

However, from a practical perspective, having a number of credit cards could make it more difficult to keep track of spending. It may also encourage an individual to spend more, with the result being that they find it more difficult to make repayments. There could also be an impact on an individual’s credit score, depending on their personal circumstances.

As such, there seem to be a range of advantages and disadvantages to having multiple credit cards. Here are a number of them that could impact on how many credit cards are worth having at any one time.

Let’s talk disadvantages

From a practical perspective, having multiple credit cards can make it more difficult to manage a budget. Consumers would need to check a variety of sources on a regular basis in order to determine how they are progressing versus their daily, weekly or monthly budget, for example.

Making it more difficult to track spending may, of course, lead to overspending for some consumers. For others, having a larger overall credit limit as a result of multiple cards may increase the temptation to spend. Should they subsequently be unable to afford their repayments, it may lead to financial difficulties further down the line.

Having multiple credit cards may impact on an individual’s credit score. Although credit scores are based on personal circumstances and different lenders have differing criteria in terms of who they wish to lend to and why, some lenders may view an individual with an excessive number of cards as being a riskier lending proposition. The number of cards which ‘excessive’ would entail is highly subjective, but it is worth consumers bearing in mind that having a large number of cards may have a negative impact on their credit score.

Although closing credit card accounts may seem to be a logical response to the problem of having too many cards, doing so could cause an individual’s credit score to worsen in the short run. It may increase their utilisation rate, which is total debt divided by total available credit. As such, it may be logical to only close credit card accounts if new credit will not be sought over the next three to six months.

But… what about the advantages?

Of course, having multiple credit cards allows an individual to have different cards for a variety of purposes. For example, they may wish to have a rewards card for day-to-day spending in order to maximise the benefits they receive. They may also decide to have a card which does not charge a non-sterling transaction fee in order to save money on fees when abroad. An individual may also wish to take advantage of a balance transfer fee offer, or a 0% interest on new purchases offer.

Having different credit cards for a variety of purposes could allow and individual to avoid fees, cut their interest payments and benefit from rewards simultaneously. With there seeming to be a lack of a credit card that fulfils these various objectives on its own, having multiple credit cards could be a sound move.

Furthermore, with digital banking becoming increasingly popular and widespread, it is becoming easier to keep track of spending on a variety of credit cards. This could help an individual with multiple cards to effectively manage their spending, while direct debits may ensure that all balances are paid off in full each month.

And the verdict is…

Having more than one credit card can make sense. Although there is no fixed number as to how many cards are too many, it is logical to consider the impact on an individual’s credit score and overall financial situation before obtaining more credit cards in future.

See our list of top credit cards.

MyWalletHero, Fool and The Motley Fool are all trading names of The Motley Fool Ltd. The Motley Fool Ltd is an Appointed Representative of Richdale Brokers & Financial Services Ltd, (FRN: 422737) for acting as a credit-broker, not a lender, for consumer credit products.

The Motley Fool receives compensation from some advertisers who provide products and services that may be covered by our editorial team. It’s one way we make money. But know that our editorial integrity and transparency matters most and our ratings aren’t influenced by compensation. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. The Motley Fool has recommended shares in Lloyds, Tesco and Barclays.