Why having Multiple Credit Cards can affect your Credit Score
Published on : April 24, 2023

Credit cards can be an important tool for managing finances and building credit. However, having multiple credit cards can impact your credit score, both positively and negatively. One advantage of having several cards is that it increases your credit limit, which lowers your credit utilisation rate and raises your credit score.

On the other hand, having too many cards can lead to overspending and missed payments, which can negatively impact your credit score. Here, we will explore the ways in which having multiple credit cards can affect your credit score and provide tips for managing multiple cards to maintain a healthy credit score.

Is it Beneficial to Have Multiple Credit Cards?

  • Increased Credit Limit 

One of the advantages of having multiple credit cards is that it can increase your overall credit limit, which can lower your credit utilisation ratio and improve your credit score.

  • More Rewards And Perks 

Different credit cards come with different reward programs and perks such as cashback, discounts etc. Having multiple cards allows you to take advantage of various rewards and maximise your benefits.

  •  Emergency Backup 

Having multiple credit cards can provide backup in case of an emergency, such as a lost or stolen card or unexpected expenses. 

  • Build Credit History 

Multiple credit cards can help you build a longer credit history and demonstrate responsible credit usage, which can improve your credit score over time.

  • Balance Transfer 

Having numerous credit cards can allow you to move balances from high-interest credit cards to cards with lower interest rates, which can minimise your interest costs and enable you to pay off debt more quickly. 

Also read: How to improve your credit score through personal loan

Does having multiple credit cards have a negative impact on your credit score?

Your credit score is influenced by how many credit cards you have, as well as how you apply for and use them. Too many credit card applications submitted simultaneously will lower your credit score by adding several hard inquiries.

  • Increases credit utilisation ratio 

If you have multiple credit cards and carry a balance on all of them, your credit utilisation ratio can increase, which can negatively impact your credit score.

  • Higher chance of missing payments 

With multiple credit cards, it can be harder to keep track of payment due dates. Missing payments or making late payments can hurt your credit score.

  • The lower average age of accounts 

When you open a new credit card, it lowers the average age of your accounts. A shorter average age of accounts can lower your credit score.

  • The temptation to overspend: 

With multiple credit cards, it can be tempting to overspend and accumulate more debt than you can handle. Your credit score may be impacted negatively by high debt levels.

What is the Maximum Number of Credit Cards one should have?


Are there benefits of having multiple credit cards?

Ans. Having multiple credit cards can provide you with increased purchasing power, more rewards and perks, and greater flexibility in managing your finances.

What is the ideal number of credit cards one should own?

Ans. The ideal number of credit cards varies for each individual and depends on their financial situation and credit management. However, 2-3 credit cards are believed to be an optimum number of credit cards.

How can I manage multiple cards effectively?

Ans. You can manage multiple credit cards effectively by setting a budget, keeping track of payment due dates, and monitoring your credit utilisation ratio.

Will having multiple credit cards increase my chances of getting approved for a personal loan?

Ans. It depends on your credit history and other factors, but having a diverse credit portfolio can potentially improve your chances of getting approved for a personal loan.

What are some rewards and perks that come with having multiple credit cards?

Ans. Rewards and perks can vary by the card issuer, but they may include cashback, travel rewards, points towards merchandise, and exclusive discounts.

How can I decide if I need more credit cards or if I should close some of my existing cards?

Ans. Consider your financial goals, credit history, and current debt levels to determine if you need more credit cards or if you should close some of your existing cards.

What should I do if I have multiple credit cards with high balances and high-interest rates?

Ans. Consider transferring balances to a card with a lower interest rate or creating a repayment plan to pay off your balances over time.