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Impact of Having More Credit Cards: Having multiple credit cards may seem like a profitable deal, but a small mistake can ruin your entire financial health. Learn how this happens.

If you're struggling with multiple credit card bills after your monthly salary, be careful. One wrong move can lower your CIBIL score and prevent you from even getting a loan or credit approval. Many people think that more cards mean more freedom, but the truth is the opposite. If one mistake is made, the very card that was meant to help can leave a stain on your financial record.

One in three people has more than two cards.

In India's rapidly growing digital economy, credit cards are no longer just for shopping or travel, but have become a part of lifestyle. Reports show that one in three credit card holders in the country now owns two or more cards. The reason is clear: the alluring world of offers, rewards, and cashback. But behind these shiny features lies an invisible danger that can lower your CIBIL score.

Who is considered a trustworthy customer?

Having multiple credit cards is beneficial only if they are used wisely. For example, if you have two cards with a limit of ₹1 lakh on each, the total limit will be ₹2 lakh. If you spend just ₹50,000, your credit utilization ratio will drop to 25%. This means the bank will believe you are not overly dependent on credit. This is why a customer with low credit utilization is considered trustworthy.

How does a credit score deteriorate?

But, just as every medicine has side effects, misuse of multiple cards can also prove dangerous to your financial health. If you repeatedly apply for new cards, a hard inquiry will be filed against you. This directly impacts your credit score and signals to banks that you're constantly trying to borrow.

How your CIBIL score can drop

Furthermore, if you don't pay on time on even one card, your overall CIBIL score can plummet. Credit bureaus consider such delays as default behavior and add them to your record. This means that even a small negligence can have an impact for years. Many people close old cards to save on annual fees. But this decision also harms your CIBIL score, as old cards strengthen your credit history. Closing them reduces your overall credit age and makes the bank think you're financially new or unstable.

How many cards is it right to have?

So the question arises: how many cards is right to have? According to experts, if you have a medium-level income, 2 to 3 cards are sufficient. For travelers or business professionals, even 4 cards are fine, provided you can pay all the bills on time. Having too many cards can cause financial stress.

In fact, managing multiple credit cards is as crucial as maintaining a balanced investment portfolio. The more wisely you use them, the stronger your CIBIL score will be. However, once you start spending beyond your limit or miss payments, those same cards can limit your financial freedom.