Does Having Multiple Credit Cards Affect Your Credit Score?

Updated: December 08, 2023 Author:

Quick answer: Holding multiple credit cards can affect your credit score for numerous reasons, including increasing the chances of missing payments, making it easier to run up bigger debts, placing more hard inquiries on your credit file due to more applications, and increasing the amount of interest you need to pay.

    What are credit cards?

    Credit cards are a form of payment method for paying for goods and services. They are issued by a financial organisation (usually a bank) and any amount spent using a credit card must be paid back within a certain time period, otherwise, interest charges are applied.

    Pros and cons of credit cards

    Credit cards can help to build a better credit score.
     Credit cards provide easy access to credit and they’re great for emergencies
    Balances can be switched between different cards at 0% interest rates, providing a longer opportunity to clear debts. Check out our article about whether switching balances will affect your credit score. 
    Some cards offer 0% interest rates on purchases for a specific period.
    Easy to run up a significant amount of debt.
    Interest charges will apply on any outstanding balances outside of an interest free period.
    Potential to damage credit rating if the minimum monthly payments aren’t met.
    Applying for credit cards places hard inquiries on your credit file, and too many applications can damage your credit score.

    What happens if you hold numerous credit cards?

    The following things can happen if you hold numerous credit cards.

    • You can be viewed as a risker prospect by financial institutions due to the fact that you have more open avenues of credit.
    •  By holding numerous different credit card accounts it may be more difficult to demonstrate good financial management of your spending habits.
    • Opening new credit card accounts will place a hard inquiry on your credit file, which may impact your credit score. Read our article on why your credit score may have dipped after getting a credit card. 
    • You could be more likely to miss payments because of having to manage multiple payment deadlines – missing payments will impact your credit score.

    What happens when you miss a credit card payment?

    Missing a credit card payment can have severe consequences on your financial health, both in the short and long term.

    In the short term, depending on the terms and conditions of your credit card, you may incur a late payment penalty fee, and/or interest rate charge, which is normally applied to the existing balance of your credit card.

    How do credit card limits work?

    Every credit card you hold will have a credit limit, which is the maximum you’re allowed to spend on that card. Credit limits vary depending on personal circumstances, however, when you apply for a credit card, the financial organisation processing your application will perform a background financial check to determine how much your credit limit should be. This check can involve looking at your credit rating, checking how many other avenues of credit you currently hold, and whether you have any negative actions such as missed payments on your credit file.

    What happens if you go over your credit limit?

    The main consequences of breaching your credit limit are as follows:

    •  A transaction could be declined due to insufficient funds.
    • Additional fees could be applied by your lender.
    • Any promotional or bonus rates that were offered when you applied for the card could be withdrawn.

    Maxing out your available credit limit could also leave you in a precarious financial position, especially if you regularly use your credit card. Not being able to use this credit option may force you to look for other, more expensive forms of short-term credit.

    Top tips for managing multiple credit cards.

    • Keep up to date records of balances of each credit card, any interest free periods, and any payment deadlines.
    • Aim to consolidate your debt into as fewer cards as possible. 
    • Close cards with zero balances.
    • Use mobile banking apps to regularly monitor and track spend. 

    For our best credit card advice, check out our ‘The Good and Bad of Credit Cards’ article.