Do You Think it is Beneficial to Have Several Credit Cards?
If appropriately used, a lot of Credit cards can be an effective way to build a credit history and enjoy the perks and rewards. However, is it advisable to carry several credit cards, or should you keep one card in mind? This article will address the following:
What number of cards do I need?
At least one credit card to earn convenience and rewards is a bright idea if you aren’t having issues managing your finances and are in a position to pay your bills on time. It is possible to have more than one if you intend to use different rewards or require additional credit lines.
How many cards are enough?
There’s no set number for number of credit cards you ought to have. Two cards may be too many for those who are not able to pay two payments.
Remember the fact that signing up for multiple cards in a short period is not a wise decision. Credit card companies may take this action as risky since it could suggest that you’re not competent in managing your money.
They may terminate your account if they suspect that there is any suspicious activity. The application for multiple cards within short periods could affect the credit rating.
Does having more than one credit card open impact my credit rating?
A credit score is dependent on the individual’s circumstances. However, the more credit cards you carry, the more difficult it could be to track the cards, make payments on time and avoid spending too much.
Benefits of being a multiple credit card holder
The advantages of having various cards are:
- Get the most rewards. Multiple cardholders can earn bonuses of the highest value on purchases. Some cards can offer cash back on gas, while others provide money in return. If you frequently travel, you should consider a card that earns miles and makes hotel rewards that could offer you other perks specific to travel, like hotel upgrades or anniversary nights.
- Low credit utilization ratio: Owning multiple credit cards could increase your credit score, helping reduce the percentage of credit use. The credit utilization ratio represents your credit limit using the credit you have available. The majority of lenders want to see it at 30 percent or less.
- Back-up cards may be very beneficial to have multiple cards if any cards get stolen or lost since it can take more than a week or two before you receive an alternate card.
- You can save money by transferring balances. You could save on interest costs by shifting the credit card balance from a high-interest credit card to one that has lower rates.
Disadvantages of being a multiple credit card holder
The negatives of having numerous cards are:
- Annual fees: Beware of having several cards that have an annual fee. The fact that you pay these fees could be a sign that the cons outweigh the benefits offered by the card, such as points or rewards (rewards cards).
- It is more challenging to keep track of your finances. The more cards you own, the more cards you have, and the more likely it will be to overlook paying the bill on time or track credit limits. Paying late can affect the score of your credit.
- Make yourself appear risky to issuers. Making multiple applications to credit cards within a six-month time frame can cause you to appear to be a difficult creditor.
- Easy to spend too much: The more credit lines you open and the higher amount of credit you can accrue.
- A variety of hard credit checks: Each time you try to request for a credit card, your credit scores are subject to the process of a hard inquiry (or the hard inquire) by the credit card issuer. A variety of hard checks can affect credit rating.
Six tips for managing your credit card debt
Here are six tips for managing many credit cards with multiple credit card accounts:
- Keep track of your monthly and annual fee due dates. Automated payments can assist you in ensuring that you don’t overpay for the monthly installment. It’s also crucial to record the date each month’s payment is due because a late payment could cause you to be charged interest. Also, keeping a record of the dates when your payment for the year is due can assist you in tracking when the fee will be due.
- Do not open new accounts to improve your score on credit. The way you use your cards is more important than you’ve got.
- Be vigilant about your balances. Do not use credit cards to purchase items you cannot pay for.
- Be aware of the timeframe while requesting a brand-new credit card. If you have already registered for a new card for a brief period, It’s advisable to wait until you can request a new one. The span of a few days could affect your credit score.
- Do not necessarily close your old credit cards when you request a new one. In many instances, a credit card company wants to have a payment history of credit as well. The longer you have old accounts open, the better to improve your score and record.
- Do not let any of your cards go unnoticed. Make sure you use all of your cards; every card reduced at a time will stop them from going into inactivity. If a card is shut down because of inactivity, the ratio of your credit utilization will increase, affecting your credit rating.
The Bottom Line: What is the best way to have several credit cards?
Multiple cardholders are good if you know the obligations to pay, stay away from overspending (spending habits), and keep an acceptable credit utilization ratio.
But, if you’re aware you are prone to accumulate large sums of money or are having trouble keeping track of payments, it’s better not to have several credit cards.
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