With Six Cards Already, Would Another One Hurt?


Dear Opening Credits,

I am 25 and currently have six credit cards open. Three are major cards (Chase, Citi and Discover) and the other three are retailer cards I used to finance purchases, and can be used only for those stores. I pay more than the minimum on the few that I use and keep the balances under control. My credit score is currently 720. I was wondering how would it affect my credit to open another card for promotional purchases like 0% interest for 12-24 months? 


Dear Don,

My recommendation is to not apply for another account, but stick with what you have. Your plan isn't awful, but here's why I think you'd be better off pulling back for a while:

  • You open yourself up to more debt. Time and time again I've seen people open fresh cards with the intention of paying it all off -- only to run up the card and not pay it off as they intended. Carrying over stagnant or growing obligations is extremely damaging to an overall financial picture, as it robs the cardholder of savings. Think of it this way: When you're paying for consumer items you've already bought, there is less money in the pot to go toward expenses and important goals.
  • You have plenty of cards to manage. Your wallet is already packed tight with plastic; do you really want one more to shove in? It seems that you use them all well, but it must take considerable mental energy to keep this many accounts straight. When it comes to credit, I'm a fan of simplicity. Get a couple cards that you can use anywhere, and use them brilliantly.
  • Your score is great right now. Somehow you've been able to charge a lot, pay on time and keep the balances significantly lower than your credit limits. How do I know this? Because those are the biggest factors in a FICO score, and your number is on the high side. I can't predict what another account will do to those digits because FICO doesn't publish those details. However, you can be sure to maintain your scoring success by not adding more than you can handle to the mix. Think of it like cosmetic surgery -- a little plastic may be an improvement, but a lot is often a disaster.
  • There's one way you won't have to wonder what a new card will do to your credit rating, or have to remember when its temporary 0% rate will escalate to normal: Stop charging. Instead, concentrate on paying those you owe until the debt is gone. After that, never let it creep up again. Follow my plan and it won't matter if any of your issuers charge 1% or 100% APR. Interest assessed on a zero balance is zero. Moreover, you'll remain in the black, putting you in an excellent position to save cash for the things you want and need. You'll also build an even higher credit score than you have today. If you eventually want to purchase a car or a home, an ultra-high FICO will help you get a loan with a super-low interest rate, potentially saving you thousands of dollars in the long run. In the meantime, you have a lovely credit score and plenty of cards. Enjoy them!