Should you have multiple credit cards? If you’ve ever accumulated credit card debt, you probably already know the answer: No!
Taking out multiple credit cards can certainly make your debt repayments unsustainable.
However, there is no simple answer to how many credit cards you should have, and having more than one credit card may even be beneficial.
Most credit card experts believe that having multiple credit cards can benefit or harm your credit score based on how well you manage them.
This hasn’t stopped Americans from using the credit cards made available to them.
According to a recent Experian research, the average American has four credit cards.
Want to know more? If yes, then let’s dive into it!!
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How Many Credit Cards Should I Have?
It depends on a countless number of factors.
Finally, because the answer is highly individualized, there is no correct number of credit cards to own.
We would be discussing some of the benefits and drawbacks of having multiple credit cards below. This article will help users determine whether they need an additional credit card.
Credit cards, among other advantages, provide individuals with access to credit, security, convenience, protection, and the ability to build a credit history.
New credit cards aim to be more alluring to users by offering features like travel perks, price matching, and even early concert ticket access.
Consumers should consider getting at least one credit card to take advantage of the ever-expanding list of perks and features.
Having Multiple Credit Cards: Is It a Good Idea?
Possessing multiple credit cards and other types of credit may be good if used responsibly.
The number and type of credit accounts are two factors that affect your credit score.
Two to three credit card accounts and other types of credit are generally recommended if your goal is to acquire or keep a good credit score. This combination may be beneficial to your credit mix.
Lenders and creditors like a wide variety of credit types on your credit report.
Managing multiple credit accounts tells lenders you understand credit and how to manage the amounts you borrow.
Many credit cards do provide borrowers with access to exclusive rewards programs.
These might include cashback on certain purchases, travel benefits, or other rewards.
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Does Multiple Credit Card Harm Your Credit Score?
When it comes to credit scores, how you use credit cards is more important than how many you have.
If you have two or twelve credit cards, your credit score will suffer if you accumulate debt that you cannot pay.
However, if you use your cards to make purchases that you begin paying off, having more credit cards can increase your credit score.
That’s primarily because more cards result in a higher combined credit limit.
If you use a small portion of your credit limit each month—experts recommend 30% or less—the credit score algorithms will reward you for managing credit wisely.
But this means that it’s important to keep spending in check. To help, consider keeping a monthly budget or using certain credit cards for specific purchases.
Paying off your balance completely and on time each month is also important.
This ensures that your credit card works as hard as possible for your credit score.
What Is The Impact Of Having Multiple Credit Cards On Your Credit Score
By reducing your debt-to-credit ratio, also referred to as your credit utilisation rate, having several credit cards might have an indirect impact on your credit ratings.
Your credit utilisation rate is the rate of credit used for your total credit.
Lenders like to see a credit utilisation rate of less than 30%. A rate of more than 30% may hurt your credit score.
You increase your total available credit when you open a new credit card.
That implies you’ll be able to spend more before hitting the credit utilisation rate of 30%.
Having a credit use rate that is already at or above 30% on a new credit card can increase your credit scores by decreasing your credit utilisation rate.
The prime thing to remember whenever you use more than one credit card is to keep track of what you owe.
Log the amount of money spent on your credit cards and be aware of the payment due dates so you don’t go into debt with credit cards or have to pay high interest or late fees.
It’s also good to pay off your credit card balances monthly rather than just the minimum.
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Pros Of Having Multiple Credit Cards
Various cards have different benefits. The use of several credit cards implies the receipt of many extra advantages.
Now, let’s consider some of the other benefits of having a number of credit cards.
• Maintain the Credit Utilisation Ratio.
If you only have one credit card, it will not be easy for you to optimise it because you cannot reach your credit line to the maximum.
Having multiple credit cards helps maintain the credit utilisation ratio (CUR) since you can choose from a variety of options.
For example, if you only have one credit card and use 90% of its credit limit, your credit utilisation ratio will automatically decrease.
However, if you have multiple credit cards and spend no more than 40% of the credit limit on each card, your credit utilisation ratio will be automatically maintained.
• Improves Credit Score–
The best way to ensure a good credit score is to effectively use a credit card.
Maintaining an ideal credit score is possible if you pay your credit card bills on time and use your credit card responsibly.
As many credit cards as one gets, the benefits will be directly multiplied, while efficient use will very much boost your credit score.
• Extra Benefits–
Each credit card provides advantages and rewards. The larger the number of credit cards, the more benefits you are likely to access.
Travel credit cards offer benefits to travellers, while fuel credit cards offer benefits to daily commuters. If you have needs that both of these cards will meet, you may buy both of them.
This will earn you travel and fuel advantage in the form of rewards, cashback, and discount vouchers.
• Enjoy the Interest–Free Period–
The interest-free period begins on the date of order and ends on the date on which the spent amount should be repaid.
It is important to note that if you fail to pay your credit cards before the stipulated date, you will have to pay interest on the amount credited.
This free period of interest is 18 to 55 days from the completion of the transaction.
This interest-free period lasts 18 to 55 days after completing the transaction.
You may maximise the benefits of each credit card’s interest-free period if you have multiple credit cards.
Cons Of Having Multiple Credit Cards
While having multiple credit cards has many benefits, it also has a few drawbacks.
Let’s look at the disadvantages of having multiple credit cards:
• Difficult To Manage-
Having multiple credit cards means reading multiple terms and conditions, remembering multiple billing cycles, and paying multiple bills.
While multiple credit cards may seem beneficial at the time of use, they may prove troublesome to manage.
Keeping track of your credit cards separately is critical to avoiding financial complications.
• Increased Debt Risk-
Having more credit cards means having a larger spending limit.
While this may be useful in an emergency, it may also negatively impact repayment of those credits.
As a result, it is critical to spend no more than the minimum amount on each credit card.
When you have many credit cards, you should not regard them as a chance to spend more than you can repay.
• Falling Credit Score Risk-
The more credit cards you apply for in a short period, the higher the chances of your credit score dropping.
However, this may only work against you in the short term. Having multiple credit cards will provide you with numerous benefits in the long run.
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Can I Submit Many Credit Card Applications At Once?
You are not limited to how many credit cards you can apply for at once. It is not advised, though.
Dealing with applications and cards might be complicated and may even damage credit reports.
Additionally, if you always sign up for credit cards for welcome bonuses and short-term perks, then cancel the accounts without paying any fees, then you are indeed abusing the rewards. In such a case, you might be considered ineligible while applying for other new cards.
How Many Credit Cards Are Too Many?
You should avoid making multiple credit inquiries since each will affect your credit score.
Many inquiries mean high risk, and six or more is considered too many.
However, with the help of an experienced credit expert, you may be able to remove some inquiries and improve your credit score.
Some people get credit cards just for the welcome bonus and then cancel them as soon as the annual fee is due, often even before the first report is sent.
This is referred to as “churning and burning. Aside from the challenges of keeping track of all this activity, there is the added drawback of how it could harm your credit score.
Even if your credit score remains strong, opening too many accounts in a short time can result in your bank refusing your new card.
Consider the benefits of each card before signing up for too many (say, travel rewards, no foreign transaction fees, or cash back on groceries or gas).
Before deciding, weigh the available bonuses against any cards you possess. Don’t be swayed by bonuses; instead, consider what you need.
How Often Should You Apply For A Credit Card?
In theory, you are free to apply for new credit cards as often as you wish.
You can easily apply for many cards because it is quick to apply using an online application, which only takes a few minutes.
However, this does not mean you should simultaneously apply for multiple credit cards.
Waiting between credit card applications is generally better for your credit score and could even improve your chances of acceptance.
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Can You Have Two Of The Same Credit Card?
As long as you meet the qualification criteria, many card issuers will accept you for another one of their credit cards.
Moreover, if you’ve always managed your current credit card well, you may find it easier to get approved for a new credit card.
However, don’t expect to get approved for the same terms as your current credit card.
Your chosen card issuer will approve your application based on your present income and credit status, which may have changed since your initial application.
There Are Points You Should Remember While Assessing Your Need for Multiple Credit Cards: they are:
• Check If An Absolute Requirement Exists:
You must be sure about needing another credit card in your name.
This will also help you choose the optimum type of card for your needs.
• Don’t Be Swayed By Introductory Offers:
If you currently have many credit cards but are applying for another one only for attractive introductory offers, you should stop the application process.
• One-Time Offers and Benefits:
These should not be the biggest reason for any individual to apply for any card.
These flash sales will not help you long-term and will add to your financial woes with the card.
• Check Your Credit Score:
In order to receive and be approved for a credit card, one requires a good credit score.
Therefore, it is very easy to hold several credit cards if you have maintained an attractive credit score.
• Assess Your Payback Capability:
Having many credit cards is one thing, and repaying the dues is another.
It’s important to avoid taking on more than you can manage and be careful not to overestimate your ability to repay while underestimating the consequences of missing payments.
This will give you an idea of the maximum number of credit cards that are appropriate for you.
• Be Aware Of the Added Responsibility:
Using multiple credit cards also implies that you have to juggle some degree of financial struggle to settle the dues you owe on all of them.
In addition to preparing the payback cash, you would also need to remember each card’s due date, the reward points’ expiration date, the card renewal date, and so on.
What If I Have Multiple Credit Cards?
If you have a problem with having too many credit cards, you may use the many features of accounts to help manage them and avoid overspending.
Keep a low credit utilisation rate, which is the percentage of your total credit used.
These multiple credit cards may be used for various expenses, but it is essential to ensure that the balances are paid by the statement date to safeguard your credit score.
Keeping the accounts open instead of closing them may be a good idea. Your credit score could suffer if you close an account.
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Final Thoughts
It is essential to know that there is no universal recommendation for the maximum number of credit cards.
One or two credit cards are a good start since you can maximise the credit card benefits without having to manage too many cards.
Getting more cards is also acceptable, and many consumers have done so successfully.
Irrespective of the number of credit cards you own, the goal is to take it slowly and practice smart spending habits.