It is easier than ever to apply for and receive a new credit card. For one, more companies are issuing cards than ever before. Secondly, credit card companies are eager to get their cards back into people’s hands.
So should you open a new credit card? Can you have too many credit cards?
The answer is complicated. When it comes to your credit score and building good credit history, having more than one card is not always beneficial. In fact, each time you open a new credit card you put a small but noticeable dent in your credit score. This is why it is advised that people do not seek new credit cards before going to the bank for a major loan like a home mortgage or new auto loan.
Having more than one card open, however, does not hurt your credit score. It is only the act of opening a new credit account – not just credit cards, but any loan – that affects your score. Once a card is open, it should have a positive effect on your score as long as you continue to repay it.
In general, the benefits of having another credit card tend to peak at three different cards. Consider filling out your wallet with these three types:
1. High cash back rewards – Look for a credit card with high cash back rewards on all your purchases. A 1% cash back reward for all purchases would be a great find.
2. High “special” rewards – Some companies give large special cash back rewards when you buy groceries or gas. Have one of these cards in hand for when you make one of these purchases to get the most benefit.
3. Low rate card – If you plan on holding a balance, having a low interest credit card – or a credit card with frequent balance transfer offers – would be a great addition to your wallet.
Having duplicates of the same credit card won’t hurt, but it won’t help either. Naturally, you’re more likely to incur fees when you have more cards as managing multiple credit cards can be difficult – it’s easy to forget a card when you have 10 or 15 currently open!
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