Multiple Credit Cards: Friend or Foe?

We have all heard the stories about people who racked up tens of thousands of dollars of credit card debt by opening too many credit cards. They have cards that have been maxed out for years. Even during months when they don’t make any new purchases on the cards, the interest charges alone keep pushing the balance beyond the credit limit. Every month, they are treading water, making minimum payments on the maxed-out cards, plus the newer ones, where the balances keep getting higher. Sometimes people in this situation make a resolution to limit themselves to just one credit card. Therefore, they close all the accounts except one and commit to paying them down, even though the progress is slow, and this approach might negatively affect their credit score. Having more than one credit card is not always bad. It can keep you from defaulting on financial obligations, and it is less detrimental to your credit score than credit cycling, which is where you max out the same card more than once in one billing cycle. If you are struggling to keep up with the payments on multiple credit cards, contact a Boca Raton debt lawyer.

How Often Can You Apply to Open a New Credit Card?

Federal and state laws do not take a position on how often you can open new credit card accounts. It is up to the credit card companies to decide. These are some common policies that credit card companies follow:

• The one-year rule – You can open one new credit card account per year, for as many consecutive or non-consecutive years as you choose.
• The 5/24 rule – You can open up to five credit card accounts in a 24-month period. If you want to open a sixth, you must wait until two years have passed since you opened the first.
• The 2/3/4 rule – You can open a maximum of two cards in 30 days, three cards in one year, and four cards in two years.

How Does Opening a New Credit Card Account Affect Your Credit Score?

When you apply for a new credit card, the credit card issuer does a hard pull of your credit reports. This can lower your credit score, but if you get approved, then your credit score quickly increases. A new credit card account increases your available credit, thereby moving your debt to credit ratio more toward credit. Having multiple credit cards and using them responsibly by making payments on them each month and not maxing them out helps your credit score in the long term. Your credit score is not your entire financial situation, though. Multiple cards often means more debt overall. It is easy to get in over your head and miss payments, which negatively affects your credit score.

Work With a Debt Lawyer About Staying Out of Trouble With Credit Cards

A South Florida debt lawyer can help you if you owe large balances on multiple credit cards.  Contact Nowack & Olson, PLLC in Jupiter, Florida to discuss your case.

Source:

capitalone.com/learn-grow/money-management/how-often-to-apply-for-a-new-credit-card