Is Having More Than 5 Credit Cards Too Much?

Having more than 5 credit cards can be bad for your financial health. Many people don’t realize how quickly their balance owing increases when they max out their credit cards. The credit limit for each card isn’t the only thing that determines how much you’re allowed to spend—there are also fees charged for certain purchases, late fees, annual fees, and other miscellaneous fees. If you don’t have the discipline only to spend what is charged on each card, having more than 5 credit cards can leave you with a big debt.

If used wisely, credit cards are powerful tools that can improve your financial life. But should you have more than 5 of them? The answer is yes—and no. Here’s what you need to know before maxing out your credit cards.

Pros & Cons of Having Multiple Credit Cards

Whether you’re a college student or a recent graduate, getting a credit card is a big step. It can serve as a good budgeting tool, but it can also wreak havoc on your finances if you’re not careful. To help you navigate the world of credit cards, here are the advantages and disadvantages that come with owning multiple cards.

5 Pros of Having Multiple Credit Cards

• Building a Better Credit Score 

Credit cards are an important tool for building a credit score. You may think that having too many credit cards can hurt you. However, having multiple credit cards can actually help you build your score, as credit accounts make up a part of your credit score. Therefore, if you own multiple cards, and are able to keep up your payments, you may see an improvement in your credit score. 

• Increased Aggregate Credit Limit

Want to learn how to increase your aggregate credit limit? If your credit is in good shape, you probably have the option to apply for multiple credit cards, but you may be thinking that having multiple credit cards sounds risky. While opening multiple credit cards does increase the amount of credit you have to open each card, this increase will only afford you a relatively small increase to your aggregate credit limit—especially when compared with the rewards and perks you’ll receive from having multiple cards.

• Maximizing Credit Card Rewards and Cashback

Having multiple credit cards can be useful for more than just spending or building credit. It can also assist you in maximizing credit card rewards and cashback. You can often earn 1 or 2 percent cashback when you have multiple credit cards, which doesn’t sound like much, but it’s certainly something.

• Being Prepared for Financial Emergencies

As you can see, having multiple credit cards can be a good or bad thing. The best reason to have multiple accounts is to prepare for unexpected expenses. Emergencies, such as medical emergencies, job loss, or home repairs can easily lead to financial struggles. Having credit cards with available credit can help make a financial crisis more manageable.

• Extra Cards as Backup

For instance, you can use an extra card as a prepaid backup for emergencies or as a backup credit card if you misplace your primary one.

5 Cons of Having Multiple Credit Cards

• Multiple accounts aren’t helping to build credit

Many people use credit cards like debit cards, spending their money as if the credit account isn’t funded until it has been paid in full. But having multiple credit card accounts can hurt you, not help you when it comes to building your credit score, especially if you miss payments.

• You use cards frequently but only pay off the minimum balance

Having too many cards can also result in over-spending, as you may forget that you are carrying multiple cards and that you may not have enough money to pay them all off. And often, people carry too many credit cards because they pay off the minimum required balances every month rather than concentrating on paying off the balance in full.

• You don’t actually like any of the cards you have

Having a card is a must these days. Each time you make a purchase, you rack up rewards points and, in some cases, special discounts. This is great if you like the rewards that are on offer but, if not, as well as being disappointing, carrying multiple accounts can lead to financial chaos. So, while a single credit card can be convenient, multiple cards can tie you up in an endless cycle of debt.

• The cards have annual fees

But what do you do when you have more than one credit card, each with its own annual fee? And what do you do when you have more credit cards but then start racking up debt? If you’re not careful, you’ll end up paying a lot more than you have to. And you may even find yourself in more debt than you started with.

• You have too much credit card debt

Having multiple credit cards can be a good thing, but where does it go wrong? Having too many credit cards can have a negative impact on your finances, and it’s not difficult to keep adding to your debt if you don’t keep an eye on it.

Having multiple credit cards can be great but can also be terrible. Credit cards can be a great financial tool, but they can become a costly headache when used incorrectly. So, hopefully, this article will help you to decide whether you are ready to open another account, or whether it’s time to close one of your credit card accounts.