Should You Have More Than One Credit Card If you’ve ever spent a lot of time in a lot of credit card debt, the answer may be no! But for everyone else, the answer may not be that easy, because having multiple credit cards can be beneficial.
According to data from the American Bankers Association, there were 377 million credit card accounts in the United States in 2020, and other reports found that nearly two-thirds of Americans have at least one credit card. some some some
There are pros and cons to having multiple credit cards, but most people agree that having multiple credit cards can either help or hinder your credit score, depending on how well you manage them.
Is it okay to have multiple credit cards?
Impact on Your Credit Score It may be one of your main concerns about having multiple credit cards. This is a common problem, but having multiple credit cards can help your credit score by keeping your credit cards easier. debt The utilization rate is low.
Is it harmful to have multiple credit cards? No, if you manage your credit wisely, keep your credit line usage below 30% and track your payment due date. some
arrival Improve your credit score, Most credit experts recommend that you avoid using more than 30% of the credit cards available per card at any one time. some By spreading your $ 1,800 purchase across multiple cards, you can more easily maintain a low credit usage rate. This ratio is just one of the factors that the FICO credit score model considers in the “backward” part of your score, but this part represents 30% of your credit score. When determining your credit score, only your payment history is more weighted (35%). some
Please note that opening accounts you don’t need just to increase your total available credit could backfire and reduce your score.
Key points
- According to the Federal Reserve Bank of Boston, two-thirds of Americans own at least one credit card. some some
- Having multiple credit cards can help you keep each card’s credit limit usage rate below the recommended 30% by sharing costs. some some
- There are potential benefits to having multiple cards, such as combining various types of bonus cards to optimize the income of all types of spending.
How many credit cards should you have?
There is no magic number for this question because everyone’s situation is different. Having at least one credit card can take full advantage of its inherent convenience, security, and other benefits. This is a strong argument. The reason for having multiple credit cards depends on whether you need additional lines of credit to meet your monthly discretionary budget or if you try to use your daily expenses to Get various types of rewards For example cashback, points or airline miles.
How many credit cards are too many?
If you can’t pay your bill, don’t need it, or don’t plan to use it for certain purposes, even having two credit cards might be too much. Although getting a new credit card can sometimes improve your credit score by reducing your total credit limit usage, it is not recommended to get a large number of credit cards in a short period. Many card issuers have even formulated rules to deal with this phenomenon, which is like trying to play the system because customers try to earn bonuses by registering a large number of credit cards, then unsubscribe after meeting the requirements. of consumption.
Different cards, different benefits
Having a range of credit cards allows you to get the biggest prize available every time you use a credit card to make a purchase.
For example, you may have a Cashback Card Take advantage of its 5% rolling cashback category so that in a few months you can get a 5% cash back on purchases of groceries, hotels, restaurants, gasoline, etc. (total spending is limited to $ 1,500 per quarter). You may have another card that always gives you a 2% gasoline refund – uses this card for nine months of the year that Discover has not paid the 5% gasoline refund. some some
Finally, you may have a card with a fixed 1% return on all purchases. This card is the primary card for making purchases without a higher reward.
Damaged card
Sometimes, if a credit card company detects potentially fraudulent activity or suspects your account may have been stolen, they will suddenly block or cancel your card.
At best, you won’t be able to use your card until you speak to the credit card company and confirm that you are indeed on vacation in Bermuda and that your card has not been stolen. However, this is not a call you can place from the cash register, as you need to provide sensitive personal information to confirm your identity. If you want to complete the purchase, you need another payment method.
In the worst case, the company will issue you a new account and you will not have the card for a few days until you receive a new card in the mail. Another possibility is that you may lose your card or get stolen. To prepare, you may need at least three cards: two to take with you and one to keep in a safe place at home. This way you should always have at least one usable card.
Because of these possibilities, it is best to have at least two or three credit cards. If you just want to have a credit card, make sure you always have a backup payment method, be it cash or a debit card.
Should you bring a credit card in case you need it?
If you don’t have to use a credit card in an emergency, it will be best and you have enough money in a mobile account such as a savings account to use in this situation. Not having the money to pay for car repairs or other unexpected expenses during the holidays can be an example of how credit cards can help. Other situations, such as unforeseen medical bills or unemployment, usually deplete emergency savings, and it can be helpful to have at least two or three credit cards in times of crisis. Ideally, these cards should have no annual fees, relatively high credit limits, and low-interest rates.
Bottom line
There are many benefits to having multiple credit cards, but only if you handle them responsibly. To make sure having multiple credit card accounts is useful for you, not against you, pay attention to the benefits each card provides, the credit limit of each account, and specifically the payment due date.
