Will Multiple Secured Credit Cards Help?

By Bruce Boswell •  Updated: 12/14/21 •  6 min read
Filed under: Uncategorized

Whether you are trying to balance out debt or build up good credit, it’s not uncommon for people to have more than one credit card. Having more than one credit card can either help or hurt your credit score, it all depends on how you use it.

No matter how many credit cards you have, the basics of credit will apply, simply keep your balances low and pay your bills on time. 

Will Multiple Secured Credit Cards Help

While the number of cards you carry won’t have an effect on your score, avoid applying for several new cards at any one time. Doing so can negatively impact your credit score in the short term.

However, over time, and if managed properly, more cards and therefore a higher credit limit can help you to improve your credit scores. 

How does this work? 

Let’s break it down for you. 

Does Having More Credit Cards Affect Your Credit Score?

If you do choose to use secured credit cards to build or even rebuild your credit, having just one is usually enough. However, it is not always recommended.

If you do have two credit cards, you would ideally want to have two from two networks, then you should also think of having two instead of one in the event you lose your card or if an issuer shuts down your account. 

Although two cards is not really necessary all the time, it can be, in certain situations, more beneficial. But, this all depends on how you run things and manage your cards, do it right, and it can be great, do it wrong, and you could just damage your credit score further. 

So, how might it help, or damage your credit score? 

Can Multiple Credit Cards Help Your Credit Score?

Each credit card that you have come with a credit limit. Many cards will give you access to a larger total credit limit, and maintaining the same level of spending after you get more cards can actually lead to good credit.

That is because credit utilization of the percentage of your total credit limit you use is one of the most important contributors to credit. The amounts you owe on your accounts actually make up a good 30% of your FICO score. 

So, if you had one card with a limit of around $1,000, and you were to make around $200 of purchases per month, this would give you a utilization rate of 20%.

If you did the same thing with a second card, then this increases your limit to $2,000 but drops your utilization to 10%. Only using a small amount of your available credit can actually help to build up your credit score in the long run! 

There is only one more important factor in your credit score than your patent history, which is paying your bills on time. Doing this is the number one best way to build up good credit. Making late payments will stay on your credit report for seven years and will damage your overall credit.

If you build up a positive payment history, though, this stays on your score for ten years, even once you close the account. 

Can Multiple Credit Cards Hurt Your Credit Score?

So, we have seen the ways multiple credit cards can impact your credit score in a good way, what about impacting in a negative way? Well, generally having multiple credit cards at once is not a good idea, and the reasons are plentiful. 

First, newer accounts will lower the average age of your credit history. Credit-scoring methodologies will reward you for longer periods of credit use. Newer accounts will not yet have given you the opportunity to demonstrate positive financial behaviors, and so your score can suffer. 

Similarly, applying for new credit will also mean that the lender will ask to look at your credit report. This means having to get a hard inquiry, which will cause a temporary drop in your score, even though it is only a few points, it is still damage done. 

Then you also have to consider that more credit cards have higher credit limits, which might actually make you tempted to spend more than you can afford to pay off each month. Carrying a balance from month to month and using a high percentage of your limit will damage your credit score.

And let’s not forget that having more credit cards also means having more due dates to keep a note of, and if you find time keeping a struggle then you are at risk of paying late and this will do your credit score no good. 

How Many Credit Cards Is Too Many?

So, let’s have a think, one credit card is generally enough, two is plenty, but how many is too many? 

Well, there is no ideal number of credit cards to have. The average American had 3.84 credit card accounts in 2020, but this does not mean that this is the ideal number for everyone, or even that everyone who had 3-4 credit cards has a good credit score either. 

You should only apply for credit cards that offer perks that you truly want or need. You should really think through the decision to apply for credit cards, especially ones that may come with annual fees, simply because you will need to make at least enough use of any points or miles programs to justify the fee.

How Many Secured Credit Cards Do You Need To Build Credit?

Realistically, you only need one credit card to build credit. You do not need to have more than one if you know what you’re doing. When it comes to applying for credit cards with the goal of building your credit, it is not how many you have, it is how you use them. 

Building credit with credit cards is all about smart financial management, and you do not need to have more than one to do this. If you want to build your credit via a credit card, try out one with the technique we mentioned earlier and try it out.

But remember, really assess whether you need to do this, before you do it.

Bruce BoswellBruce Boswell

Bruce Boswell

Bruce Boswell enjoys researching and writing about all things related to investing and saving money. Whenever he has a chance, Bruce loves travelling all around the world with his wife and trying new foods.