The largest collection of valid credit cards belongs to Guinness world record holder Zheng Xiangchen, who has a whopping 1,562 cards. Trust us, you don’t need that many — but having more than one credit card can provide several financial benefits if used carefully.
“For a disciplined card user, there is no downside to having a lot of cards,” says John Ulzheimer, a credit score expert who previously worked for FICO and Equifax. “But, there’s a downside to having too few, especially when it comes to credit scores,” he says. Here’s what you need to know to improve your credit score and maximize your rewards.
Does Having More than One Credit Card Help Your Credit Score?
In most cases, having more than one credit card can help your credit score. “Having multiple credit cards makes it easier to keep your credit utilization low, which is better for your credit scores,” says Mason Miranda, credit industry specialist at Credit Card Insider. Your credit utilization ratio is the amount you borrow compared to your total credit line. “If you have several credit cards with large open and unused credit lines, even a high balance may not impact your credit utilization too much.”
In fact, there’s really no such thing as too many credit cards from a credit scoring perspective, according to Ulzheimer. “Now, having too many cards with balances or having too much credit card debt, yes, that can cause you to have lower scores,” he says. But as long as you pay off your balances in full, “just having a lot of credit cards is not punitive.”
However, you don’t want to apply for too many new accounts over a short period of time if you can help it. Try waiting about six months in between credit applications to be safe, Miranda says.
There’s an exception to this rule of thumb. When you’re shopping to compare rates on things like a mortgage or auto loan, credit scoring models will count multiple inquiries as only one if they are completed over a short period of time, typically 14 to 45 days, according to Equifax.
Another thing to keep in mind is that each credit card issuer has its own rules about how often you can apply for its cards and how many you can have at once. But you’re not likely to bump up against these limits if you acquire cards slowly as Miranda and Ulzheimer suggest.
How Do Credit Scores Work?
Your credit score is a numerical representation of your creditworthiness, or the level of risk a lender takes on when extending credit to you. If you have an excellent credit score, lenders will assume you are likely to make on-time payments, so they’ll offer you the best terms and the lowest interest rates. If you have bad credit, you’ll either get rejected or pay more money to borrow if you’re approved.
There are five key factors that contribute to your FICO score:
- Payment History (35%): This looks at your history of on-time and late payments. To improve your credit score, always make your payments on-time and in full. You may want to set up automatic payments to ensure you never miss one.
- Amounts Owed (30%): This looks at your overall debt versus your available credit. It’s the key reason it’s important to pay off your statement balances in full each month, says Miranda. This will ensure that you don’t carry a balance and will positively contribute to your credit scores by reducing your credit utilization, he says. Try to keep your credit utilization ratio under 30% for the best credit score.
- Length of Credit History (15%): This looks at how long your accounts have been open, typically calculated by taking the average age of all cards. To maintain a longer credit history, you should avoid closing a credit card. “The longer you keep your credit card accounts open, the better,” says Miranda. “This is because credit scoring models like to see mature credit accounts; the older your average age of accounts, the better it is for your credit scores.”
- Credit Mix (10%): This looks at the different types of credit you have — revolving (like credit cards or lines of credit), installment (like student loans and mortgages), and open (like utility bills). You can have a great score with just revolving debt but demonstrating that you’re able to manage different types of debt can give you an extra boost.
- New Credit (10%): This looks at recent applications for new credit. A new credit card application will cause a small but temporary dip in your credit score, so you should avoid applying for too many cards at once. “This should be treated like a marathon, not a sprint,” says Ulzheimer. “Acquiring credit cards should happen organically, as in when you need them. It should take you many years to build out an inventory of credit cards.”
Which Cards Are Best to Pair Together?
If you can qualify for cash-back or rewards cards, you can maximize your rewards by having more than one. A good strategy is to choose one card with an overall high earnings rate on all purchases and another card or two that earn extra points on a category of spending that is important to you. Here are some card pairings you could consider.
Chase Trifecta and Chase Quartet
Points from Chase Ultimate Rewards cards can be pooled in the same account and used for a single purchase through the Chase Ultimate Rewards Portal, so pairing three or four cards from Chase’s different card families can be a great rewards strategy. For example, you might pair some of these cards together and use each for different purposes:
- Chase Sapphire Reserve®
- Ink Business Preferred® Credit Card
- Chase Freedom Unlimited®
- Chase Freedom Flex℠
- Chase Sapphire Preferred® Card
With this strategy, you can transfer rewards from bonus categories to your Chase Sapphire Reserve card account and use them at the boosted rate — with each point being worth 1.5 cents instead of the standard 1 cent — for travel through the Chase Ultimate Rewards portal. For example, the Chase Freedom Unlimited is offering 3% cash back on dining at restaurants, including takeout and eligible delivery service. If you were to transfer those points to your Sapphire Reserve account, they’d be worth 1.5 cents each towards travel. If you were to spend $5,000 on dining in a year, you’d earn $225 towards your next trip. If you don’t want to pay the Chase Sapphire Reserve’s $550 annual fee, you can also use this strategy with the Chase Sapphire Preferred. When redeeming points for travel from your Chase Sapphire Preferred account, each point is worth 1.25 cents.
If you plan to get multiple Chase cards, be aware of the unconfirmed “5/24 rule.” Though the company has not confirmed this rule, it’s rumored that Chase won’t accept your application if you’ve applied for five or more cards (from any issuer) in the last 24 months.
Chase Sapphire Preferred® Card
- Intro offer:60,000 points
- Annual fee:$95
- Regular APR:19.74% – 26.74% Variable
- Recommended credit:670-850 (Good to Excellent)
- Apply Now At Chase’s secure site
Chase Sapphire Reserve®
- Intro offer:60,000 points
- Annual fee:$550
- Regular APR:20.74% – 27.74% Variable
- Recommended credit:740-850 (Excellent)
- Apply Now At Chase’s secure site
Cash Back and Travel Cards
Another strategy is to pair a travel rewards card that earns points on travel and dining with a cash back card that earns points on all purchases. For example, you could pair the American Express® Gold Card, which earns extra points on travel and dining, with the Citi® Double Cash Card, which earns double points on all purchases (1% cash back when you buy, plus 1% as you pay for those purchases).
Flat Cash Back and Tiered or Rotating Cash Back Cards
If you’re mostly interested in earning cash back rather than miles, it can be a good strategy to pair a flat cash back card with another card that has tiered cash back on the category of your choice or rotating cash back categories. For example, you might pair the Capital One Quicksilver Cash Rewards Credit Card, which earns a flat rate for all purchases, with the Chase Freedom Flex, which earns 5% cash back in rotating categories each quarter.
Our Experts’ Favorite Pairings
Miranda says he and his wife use a couple of different fee-free cards. “The Citi Double Cash card is our favorite and the one we use most often. It gets us 2% cash back on any purchase from any location that accepts Mastercard (1% cash back when you buy, plus an additional 1% as you pay for those purchases). It’s rare to see a cash back card this high of a percentage without an annual fee,” he says. “We use the American Express Blue Cash Everyday® Card specifically for grocery shopping at U.S. supermarkets. We get 3% on all our groceries at U.S. supermarkets on up to $6,000 per year in purchases, then 1%, and there are some good incentives with their partnerships.”
To maximize your rewards, pair an everyday spending card with a card that earns bonus points in a particular category.
Ulzheimer says he pairs a high level travel card with a hotel chain card. “That will take care of just about anything you need for business or personal travel,” he says.
The ultimate collection of credit cards for you will depend on how and where you spend your money and what other perks you’re looking for. Pay attention to welcome bonuses as well, since these can help you rack up rewards more quickly.