TPG reader question: How many credit cards are too many?
Editor’s note: This article is part of a column where we answer your toughest credit card questions. If you would like to ask us a question, tweet us at @thepointsguy, message us on Facebook or email us at firstname.lastname@example.org.
If you’re like me when it comes to travel rewards, you want all the points and miles you can get. You sign up for all of the latest airline and hotel program promotions, use online shopping portals, take surveys, participate in dining programs and frequently open new credit cards.
However, it’s important not to get in over your head, especially when it comes to having too many credit cards. TPG reader Peter G. wants to know:
“How many credit cards are too many?”Peter G.
The answer varies depending on the person, as five cards might be too many for one person, while another person may manage just fine with 22. Here are some indications that it might be time to slow down and reassess.
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You have trouble paying the annual fees
Card annual fees can quickly add up to thousands of dollars per year. Let’s say you have The Platinum Card® from American Express ($695 annual fee; see rates and fees), Chase Sapphire Reserve ($550), Citi Prestige® Card ($495), Hilton Honors American Express Aspire Card ($450 annual fee; see rates and fees) and a Marriott Bonvoy Brilliant™ American Express® Card ($450 annual fee; see rates and fees) in your wallet. Those fees add up to around $2,500 a year. Tack on about five other cards with fees under $100 a year, and you’re easily approaching $3,000. That’s no small chunk of change.
The information for the Citi Prestige Card and Hilton Aspire Amex card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Yes, you can call the banks and ask for retention offers, but it is not a guarantee of success, especially if they see you’ve already received a retention offer in the previous year.
If these fees are presenting a hardship and your retention offer attempts are unsuccessful, it’s time to consider paring down your card count.
Even if you feel you can afford the annual fees, it can still be a good exercise to add up all of your annual fees, analyze whether you use the card and loyalty program to get enough value from the fee, and consider if there are other ways you might instead use that money — like to save up for a down payment on a home, your kid’s college fund or your retirement – or to make charitable donations.
Taking a look at the total can be eye-opening, as your annual fees probably don’t all come due at the same time and it can be easy to just see it as a few hundred dollars here and there.
You forget to pay on time
When you have a lot of credit cards, all of the due dates are unlikely to be the same unless you take steps to change all of the dates with the banks. Life happens, and it can sometimes be challenging to stay organized.
Setting up autopay can help prevent late fees and interest charges (if you pay in full). If you happen to spend on an infrequently used card that doesn’t have autopay set up (maybe there’s a temporary spending category you used that month, for example), it can be easy to let a due date slip by. Or you can miss the due date for an annual fee on a card in the sock drawer.
Not getting approval on new applications
Are you seeing the latest, six-figure sign-up bonuses and just itching to apply, but worried you won’t get approved? Or perhaps you actually apply but are denied for “too many recent inquiries” or similar reasons?
If you’re getting denied for new cards, the banks might think you already have enough credit either with them or in total. And some issuers, like Amex, have a limit on how many credit cards you can have. Once you’re at their limit, you’ll have to close a card before being approved for a new one.
In an ideal world, we all would be approved for every card we want, but unfortunately, the banks see it as a risk to extend too much credit to one person.
You carry balances on some cards, and cards with no balances tempt you to spend
You should avoid carrying a balance if at all possible, but it’s even more of a no-no with your travel rewards cards. Rewards cards typically have higher interest rates compared to non-rewards credit cards.
If you’re at a point where you’re consistently charging more than you can pay off when the bill comes due, it might be time to analyze your budget and reduce your credit card usage. I’m not saying to cut out the miles and points cards completely or start using debit cards, but having less credit availability could help if you’re prone to overspending.
Banks have closed your cards due to inactivity
Maybe you’ve opened cards, completed the minimum spending requirements to get the sign-up bonuses and then let the cards sit idle for months on end. Some banks will close your account after a certain amount of time with no activity. Some issuers may notify you that your card will be closed by a certain date due to inactivity, giving you a chance to use it or proactively close it on your own. Others will not notify you.
A card inactivity closure can cause your credit score to go down, especially if it’s an older card that was boosting your average age of accounts. It also may cause your credit utilization to go up, which can negatively impact your credit score.
If the card has no use to you, you might as well proactively close it and not give the issuer a chance to do so later. Then you no longer need to keep up with it and risk missing fraudulent use or an annual fee payment. Another reason to close it is so that you can potentially reapply again in the future to receive another sign-up bonus (bank rules vary).
One of the most important methods to maximizing your miles and points earned is by opening new credit cards. An eagerness to obtain all of the best cards is understandable. While there’s no definitive answer regarding just how many credit cards are too many, keep these signs in mind to help determine the answer for your personal situation.
If you find yourself experiencing some of these issues, it may be time to put the brakes on new cards and maybe even close some unused ones.
Additional reporting by Stella Shon.
Featured photo by Orli Friedman for The Points Guy.