Chip Lupo, Credit Card Writer
It is not bad to have a lot of credit cards with zero balance because positive information will appear on your credit reports each month since all of the accounts are current. Having credit cards with zero balance also results in a low credit utilization ratio, which is good for your credit score, too.
One case where it would be bad to have a lot of credit cards with zero balance is if you open them all within a short amount of time, as that would initially damage your credit score from all of the hard inquiries. It would also be bad to have so many cards that they become difficult to keep track of and monitor for fraud.
When It’s Bad to Have a Lot of Credit Cards With Zero Balance
- When you open them within a short amount of time. Applying for a credit card triggers a hard inquiry into your credit history, which will drop your credit score by 5 to 10 points. Applying for multiple cards in a short amount of time hurts your score a lot more because it indicates that you’re desperate to borrow. Over time, however, the positive information from having numerous credit cards with zero balance should counteract that initial decrease.
- When you can’t keep track of them. Even if you don’t charge purchases to your credit cards, you still need to monitor them for any unauthorized charges. If you have so many cards that you can’t keep track of them, that’s unsafe.
- When it causes them to be closed. Some issuers will close a credit card after a certain period of inactivity (no purchases or payments). If you want to prevent this, make small purchases every few months and pay the bill in full.
While having credit cards with zero balance can be positive for your credit score, it’s not as helpful as making small purchases each month and paying them off by the due date. Charging 1% to 10% of your card’s credit limit will lead to the best results for your credit score.
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