5 questions to ask before applying for a rewards card

Cashing In columnist Tony Mecia
Tony Mecia is a business journalist who writes for a number of trade and general-interest publications. He writes "Cashing In," a weekly column about credit card rewards programs, for CreditCards.com

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Question Dear Cashing In,
How many cards per year is too many to sign up for? I like several of the reward cards that are out there, but worry about my credit rating from applying for too many cards. – Marlene

Answer Dear Marlene,
While there are dozens and dozens of reward cards available, it pays to be selective. Some cards are better than others. Some have complicated award redemptions. Not every card is for you.

In theory, there is no limit to the number of cards you can apply for and receive. If you read many of the points and miles bloggers out there, you will see some that say they have 20 or 30 cards, maybe more. To most of us, that seems excessive.

In practice, there are at least five questions to ask before adding too many cards to your wallet: 

  1. How crucial is my credit score right now?
    Concerns about the effect on credit scores tend to be overblown. It is true that every time you apply for a card, your credit score takes a slight and temporary dip of a few points. But it is also true that you can have a lot of cards and still have excellent credit if you pay your bills in full and on time. The worst time to apply for new cards is when you're about to buy a home and apply for a mortgage, when every credit score point counts.
  2. Can I meet the spending requirement?
    One potential downside to opening a lot of reward cards in quick succession is that they are all likely to have minimum spending requirements to receive a sign-up bonus. These amounts are usually a few thousand dollars of spending in the first three months. If you open a lot of cards at once, you might have trouble spending all that money on the cards.
  3. Will a card now hurt my chances later?
    As consumers have warmed to reward cards, some issuers have started placing limits on approving new cards to customers who repeatedly apply. For instance, Chase recently enacted a rule limiting card approvals of people who apply for more than five cards from any issuer in a two-year period. That means you will need to be more selective with other issuers’ cards if you are also interested in a Chase card.
  4. Can I manage additional cards?
     If you have one or two cards, it is pretty easy to remember when payments are due and how the rewards programs are structured. If you have 15 cards, that task of managing multiple rewards cards becomes a lot more difficult. People who have a lot of cards tend to enable auto-pay on their accounts and use a hard-working spreadsheet. If you earn a lot of rewards, you should also consider whether you will be able to use them all before they expire. Typically, airline miles expire after 18 months with no activity on the account. Bank program miles often do not expire.
  5. Is there an annual fee worth paying?
    Not all reward cards have annual fees, but many of the ones with the most generous rewards do. Sometimes they waive the fees for the first year, sometimes they don’t. If you have a lot of cards, those fees can add up. You’ll want to review your cards annually and purge those that are no longer giving you value.

There is no specific number that is too many. It really just depends how many you feel comfortable with, keeping in mind your answers to the questions above.

One common strategy is to have one go-to card that offers rewards in a currency you like, such as a particular airline’s miles, cash back or bank-reward points. Then, use a few other cards for particular kinds of spending, such as one that offers big bonuses on restaurants, another that offers bonuses at grocery stores and so on. Occasionally, you will need to adjust to accommodate minimum spending requirements on new cards. But that approach can be the building blocks for using cards to accumulate rewards.

See related: Weighing the value of special card reward deals, 8 creative ways to build credit card rewards points quickly

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Updated: 02-16-2019