Is There a Limit to How Many Credit Cards I Can Get in a Year?

how-many-credit-cards-can-you-have

If you have excellent credit, then may believe that you can be approved for any new credit card. Unfortunately, that’s not always the case. In recent years, it appears as if some credit card applications are being denied despite an applicant’s solid credit history.

Why Your Application May Have Been Denied

If a bank will offer you tens of thousands of points or miles when you open a new card, what’s to prevent you from opening up two new accounts? How about ten, or, even, one hundred? There are some credit card enthusiasts and award travel hobbyists who try to exploit these offers to their logical extreme, in the pursuit of as many points and miles as possible.

Customers could theoretically collect these signup bonuses, but not actually use their cards once the minimum spending requirements were met. In addition, without restrictions, cardholders could seemingly apply for the same credit cards and earn multiple sign-up bonuses.

The Issuers Weigh In

Some card issuers are placing limits on the number of cards that customers can receive, irrespective of their credit history and credit score, that can thwart the aforementioned practices (also referred to as card churning). For example, most applications for Chase cards specify that “this product is available to you if you do not have this card and have not received a new cardmember bonus for this card in the past 24 months.”

According to an email from a spokesperson for the bank, “Chase carefully reviews each application, and considers a variety of factors, including the number of cards opened. Customers who open multiple card applications in a short period of time, regardless of issuer, will likely encounter difficulties.”

American Express specifies on its credit card applications that the “welcome bonus offer is not available to applicants who have or have had this product.” An American Express spokesperson confirmed this policy in an email, though they pointed out that the company makes targeted offers to customers as well. 

Finally, a spokesperson for Citi explained in an email that “for Citi-branded Cards, we do not have a hard limit on the number of cards a consumer can have.” However, “bonus points are not available if a cardmember has opened or closed a card in the past 24 months within the same family of cards,” they added. (Full Disclosure: Citibank advertises on Credit.com, but that results in no preferential editorial treatment.)

How Many Credit Cards Should You Get in a Year?

Whether or not you will be able to receive multiple credit cards might depend on the policies of the particular bank you are submitting your application to. But the more important question is how many credit cards should you apply for each year.

Many American credit card users carry a balance on their cards at least some of the time. These cardholders who are paying interest on their charges are best-served by focusing on paying off their balances, not applying for new credit cards to earn rewards. (These credit card users may alternately want to consider applying for a single new card with a 0% annual percentage rate promotional financing offer for balance transfers. You can find more on balance transfer credit cards here.) 

If you consistently avoid interest charges by paying your entire statement balance in full each month, then, yes, you might want to consider occasionally updating your credit card portfolio. And when you do so, you should try to take advantage of the most competitive new offers, and the most generous signup bonuses. However, you should only be applying for new credit cards if you are sure that you can manage the new accounts responsibly — meaning you can pay all your bills on time and keep the amount of debt you owe on individual cards and collectively below at least 30% and ideally 10% of your limit(s).

Beyond that, it’s important to read the terms and conditions of any credit card you’re considering carefully in order to determine if it’s the right one for your wallet. Also, you’ll want to be sure your credit can handle a small hit. Each credit card application can generate a hard inquiry on your credit report, which can ding your credit scores — and multiple inquiries can do some bigger damage, particularly if your credit is on the bubble. (You can see where your credit currently stands by viewing two of your credit scores, updated every 14 days, for free on Credit.com.) 

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

 

Image: Eugenio Marongiu

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5 Things Guaranteed to Happen When You Apply for a Credit Card

when-you-apply-for-a-credit-card

Ever wonder what happens when you apply for a credit card? You submit the application, but what happens afterward remains a mystery to most people. That’s because credit card applications can be processed a bit differently, depending on the issuer. Underwriting standards vary, issuers may look at different versions of your credit reports or credit scores and varying algorithms get crunched. 

Still, regardless of how a credit card issuer chooses to review your application, there are a few things that are certain to happen during this process. Here are five of them.

1. Your Identity Will Be Verified

When asked for their personal information, some people would prefer to remain anonymous and create a pseudonym. But intentionally providing misinformation — or lying — on a credit card application is illegal (it’s essentially considered fraud.) Plus, when you apply for a credit card, you will be asked for a lot of personal information, including your name, your birth date and your Social Security number. All of these must match up with a real person who has an actual credit history before your account can be considered. If you don’t provide all of this relevant info or make a mistake when filling the form, you can expect the card issuer to contact you for accurate info.

2. You’ll Receive an Immediate Response

The credit card issuer will always respond to your application immediately but not necessarily with a decision. In some cases, applicants receive instant approval, but they’re just as likely to only receive confirmation that their application has been submitted with a promise of further review.

3. Your Credit History Will Be Examined

Once the card issuer has verified your identity, it will research your credit history with at least one of the three major consumer credit reporting agencies. In fact, your authorization to do so was included in the fine print you agreed on when you submitted your application. Scrutiny will be placed on your payment history, the amounts you owe and any other recent applications for new credit.

4. You’ll Receive a Decision

Every job seeker has had the experience of applying for a job but never hearing back from the employer. At least when you apply for a credit card, you’re guaranteed to find out if you were approved or denied. If it’s the former, you can look forward to receiving a card in the mail, along with a statement of benefits and terms and conditions. If your application is denied, the card issuer will send a letter called an adverse action notice. This legally mandated notice will explain why your application was denied, say, for carrying too much debt or having too many recent credit inquiries on your credit report.

5. A Hard Inquiry Will Appear on Your Credit Report

The credit pull that the issuer conducts is considered a hard inquiry, which will almost always appear on your credit report and can hurt your credit score. That’s why it’s generally recommended that you refrain from applying for too many credit cards at once. Instead, you’ll want to do some research ahead of time to find out which one is right for you and whether your income and credit score can qualify for it.

Understanding the Application Process

Knowing a little bit about the credit card application process can allow you to maximize your chance of approval. First, you can make sure you accurately fill out the personal identification section of your application, double-checking all of the identity information that you supplied. But more importantly, you should also be verifying that the information in your credit history is accurate.

Fortunately, the consumer credit bureaus are required to offer everyone a free credit report, which you can obtain at AnnualCreditReport.com. If you find any errors, you can contact the credit bureau to dispute the information. (You can also see where your credit stands by viewing two of your credit scores for free each month on Credit.com.)

As soon as you apply for a credit card, you can also take a look at the confirmation. If it doesn’t offer an approval or denial, it may still provide an application confirmation number and a phone number to follow up with for an immediate decision. If your application is denied for any reason, you can learn why from the adverse action letter and take steps to fix the problems it identifies.

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Can I Apply for More Than One Credit Card at the Same Time?

more-than-one-credit-card

When you go to the hardware store to buy tools, you often find that you need more than one. Likewise, there are also some times when you may feel inclined to apply for multiple credit cards at once.

Sometimes, there are several special, limited-time offers that you want to take advantage of, while other times you may simply need multiple different cards for their unique features. And occasionally, you may wish to apply for both a business and a personal credit card at the same time.

No Big Deal?

There’s nothing saying you can’t apply for multiple credit cards at the same time. Each application is generally considered separately, and it’s not uncommon for some people to be approved for two or three new credit card accounts on the same day. However, there are some potential drawbacks that you should consider before going down this road.

First, each credit card application you submit will result in a hard inquiry on your credit report. And having multiple inquiries for new credit in a short period of time can hurt your credit score, as the scoring formulas can interpret this as sign of potential financial distress.

Thankfully, any drop this causes in most credit scores will be small and temporary, as recent inquiries are not nearly as important to your score as your record of on-time payments or your level of debt is. Nevertheless, it’s best to avoid applying for any new credit cards in the months before completing a new applications for a major loan such as a home mortgage or car loan because you want your credit score to be in the best shape possible. And, if you’re working on repairing your credit, you may want to keep new credit inquiries to a minimum.

Next, you should consider that applying for multiple credit cards at once may reduce the chances of being approved for all of those new accounts, as each card issuer will look at your credit report — and, depending on the time, could see all those recent applications for new plastic. If that’s the case, even if you have an excellent credit score, you may not be automatically approved for each new account (again, issuers may view taking on multiple credit lines at once as a sign of risk), and you may have to speak to a new accounts specialist and explain why you submitted multiple applications.

Finally, you should ensure that you are capable of managing multiple new accounts. Each one of these new accounts will have its own monthly statement that needs to be reviewed, and payments that must be made on time. And if you are applying for multiple new accounts in order to earn sign-up bonuses, you will likely have to complete the minimum spending requirement for each new account — which could lead to overspending if those thresholds are beyond your budget.

Upping the Approval Odds

Whether you’re applying for one or multiple credit cards, issuers will hesitate to approve new applications for credit if they feel you may be in financial trouble. Therefore, the best way to maximize your chance of approval for any credit card is to minimize your existing debt. To do this, pay down your existing credit card balances as much as possible, especially on any accounts you have with the card issuers that you are applying to. And it’s a good idea to wait until your next statement has closed so the lower balance is reflected on your credit report. (Remember, issuers tend to report balances as of your statement’s billing date versus the day your payment is actually due.)

And, remember, a good credit score can help you qualify for the best terms and conditions. (You can see two of your credit scores for free, updated each month, on Credit.com.) So, if you’re looking for a new credit card, you may want to see if there’s anything you can do ahead of filling out the application to improve your standing. You can build good credit in the long-term by making all your loan payments on time, keeping debt levels low and adding a mix of accounts to your credit profile only as your score(s) and your wallet can handle doing so.

[Offer: If you need help fixing errors on your credit report, Lexington Law could help you meet your goals. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

More on Credit Cards:

Image: Martin Dimitrov

The post Can I Apply for More Than One Credit Card at the Same Time? appeared first on Credit.com.

Can I Apply for More Than One Credit Card at the Same Time?

more-than-one-credit-card

When you go to the hardware store to buy tools, you often find that you need more than one. Likewise, there are also some times when you may feel inclined to apply for multiple credit cards at once.

Sometimes, there are several special, limited-time offers that you want to take advantage of, while other times you may simply need multiple different cards for their unique features. And occasionally, you may wish to apply for both a business and a personal credit card at the same time.

No Big Deal?

There’s nothing saying you can’t apply for multiple credit cards at the same time. Each application is generally considered separately, and it’s not uncommon for some people to be approved for two or three new credit card accounts on the same day. However, there are some potential drawbacks that you should consider before going down this road.

First, each credit card application you submit will result in a hard inquiry on your credit report. And having multiple inquiries for new credit in a short period of time can hurt your credit score, as the scoring formulas can interpret this as sign of potential financial distress.

Thankfully, any drop this causes in most credit scores will be small and temporary, as recent inquiries are not nearly as important to your score as your record of on-time payments or your level of debt is. Nevertheless, it’s best to avoid applying for any new credit cards in the months before completing a new applications for a major loan such as a home mortgage or car loan because you want your credit score to be in the best shape possible. And, if you’re working on repairing your credit, you may want to keep new credit inquiries to a minimum.

Next, you should consider that applying for multiple credit cards at once may reduce the chances of being approved for all of those new accounts, as each card issuer will look at your credit report — and, depending on the time, could see all those recent applications for new plastic. If that’s the case, even if you have an excellent credit score, you may not be automatically approved for each new account (again, issuers may view taking on multiple credit lines at once as a sign of risk), and you may have to speak to a new accounts specialist and explain why you submitted multiple applications.

Finally, you should ensure that you are capable of managing multiple new accounts. Each one of these new accounts will have its own monthly statement that needs to be reviewed, and payments that must be made on time. And if you are applying for multiple new accounts in order to earn sign-up bonuses, you will likely have to complete the minimum spending requirement for each new account — which could lead to overspending if those thresholds are beyond your budget.

Upping the Approval Odds

Whether you’re applying for one or multiple credit cards, issuers will hesitate to approve new applications for credit if they feel you may be in financial trouble. Therefore, the best way to maximize your chance of approval for any credit card is to minimize your existing debt. To do this, pay down your existing credit card balances as much as possible, especially on any accounts you have with the card issuers that you are applying to. And it’s a good idea to wait until your next statement has closed so the lower balance is reflected on your credit report. (Remember, issuers tend to report balances as of your statement’s billing date versus the day your payment is actually due.)

And, remember, a good credit score can help you qualify for the best terms and conditions. (You can see two of your credit scores for free, updated each month, on Credit.com.) So, if you’re looking for a new credit card, you may want to see if there’s anything you can do ahead of filling out the application to improve your standing. You can build good credit in the long-term by making all your loan payments on time, keeping debt levels low and adding a mix of accounts to your credit profile only as your score(s) and your wallet can handle doing so.

[Offer: If you need help fixing errors on your credit report, Lexington Law could help you meet your goals. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

More on Credit Cards:

Image: Martin Dimitrov

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6 Ways to Avoid Getting Rejected for a Credit Card

It can hurt to have your credit card application rejected. Not only will you be denied an account with the line of credit, rewards or benefits that you had hoped for, but it can feel like the card issuer has judged your entire financial worth, and found you unfit.

Thankfully, there are many parts of the credit card application process that are within your control — and several simple steps you can take to increase the chances of your application being approved.

Here are five things you can do to keep yourself from getting rejected for a credit card.

1. Apply for a Card Your Credit Can Qualify For

Just as students are counseled not to apply to elite colleges unless they have very high grades, there is no sense in applying for a credit card that requires an excellent credit history unless you have one. In general, different credit cards are designed to meet the needs of applicants that fall roughly into the following five groups: excellent (a 750+ credit score on a 300 to 850 scale), good (700 to 749), fair (650 to 699), poor (600 to 649) or bad credit (below 599).

Cards designed for those with the highest credit scores will typically offer the most favorable terms, like a lower interest rate or lucrative rewards program, while those made for applicants with lower scores will generally have higher rates and fewer benefits. To increase your chances of approval, find out your credit score in advance and apply for cards that are offered to those with your credit profile. (You can see how your credit currently fares by viewing two of your credit scores, updated each month, for free on Credit.com.)

2. Improve Your Credit Score

Of course, if your credit is in one of those lower aforementioned categories, you can up the odds of qualifying for better terms and conditions by taking steps to improve your score. You can generally fix your credit by disputing errors on your credit report, identifying your credit score killers and creating a game plan to address them.

3. Pay Down Debts Before You Apply  

One of the main reasons that card issuers will deny an application is due to the concern that you will not pay back the loan, especially if you have other debts. Yet some cardholders who appear to have debt on their credit report simply have statement balances from their cards that they plan on paying in full by the due date. That’s typically because issuers tend to report your balances as of your billing date and not the actual date payment is due.

To reduce this apparent debt, try paying off any balance first before the statement period closes, and then applying after the statement closes and a zero balance is reported to the consumer credit bureaus. You can contact your issuer if you’re unsure what dates might apply to your account.

4. State All Sources of Income

One of the issues that can work against applicants is how they state their income. In addition to reporting money earned from employment, applicants over 21 are generally also able to list non-employment sources such as investments, spousal and child support, retirement benefits, and government benefits. Also, the Consumer Financial Protection Bureau lifted restrictions against including a spouse’s income back in 2013. Under its guidance, you can include your spouse’s income if you have a reasonable expectation of access to it.

5. Don’t Apply for Too Many Cards

Another reason that some credit card applications are rejected — even when the applicant has a seemingly good credit score — is that the said applicant has too many recent applications for credit cards. To a card issuer, these multiple applications can be interpreted as a sign of possible financial difficulty. If you have already applied for several credit cards, or other loans, within the past few months, it might be best to wait a few more months before filling out new applications.

6. Ask for Reconsideration

When a credit card application is processed, it’s often a computer that makes the initial decision on whether to approve or deny it. And while most people will just accept this decision as final, you may be able to contact the card issuer and ask to have your application reconsidered. When you do this, you generally will be connected with an account manager who will hear from you why your application should be approved. You can cite a reason, such as your loyalty to the bank, while bolstering your application by supplying additional information such as other sources of income that you may have originally omitted.

[Offer: Denied from a loan? It may be because of a low credit score due to errors on your report. Lexington Law can help you navigate the credit repair process so you can get back on track. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

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