How many credit cards should you have? Is it ok to own multiple credit cards? Here is the best expert advice.
How many credit cards should you have? Multiple credit cards can be a good thing for your finances, provided you keep them in check and you take note of how much credit card interest you are accruing.
There is no one right answer to the number of credit cards you should have, as financial needs and wants to vary from person to person, and this may prompt you to ask, How many credit cards should you have?
These are some things to consider when you decide to add cards to your wallet.
How many credit cards should you have?
According to Experian data, the average American has 3.84 credit card accounts. There is no universal answer as to how many you need.
It is crucial to weigh the pros and cons of having more than one credit line. Also, consider how multiple cards could improve or worsen your credit score and financial situation.
Benefits Of Having Multiple Credit Cards
You can get multiple benefits from more than one credit card. Here are some reasons:
Your credit limit can be increased: Your FICO score is the second most important factor(r). Score Is your credit utilization percentage of credit that you use on credit cards or other revolving debt.
You can increase your credit available by adding a new card to your credit portfolio, which can help lower your utilization ratio. However, it is germane that you do not increase your spending.
Maximize your reward potential: you are credit card rewards. Multiple credit cards can be a great way to maximize your cash back, points, and miles. One card might offer great rewards for dining out, but not for groceries or gas.
You can get more rewards if you have more than one card than if all of your purchases were made with the same card.
Other perks are available. Certain credit cards have additional benefits that go beyond the rewards program. You may be eligible to get a new card.0% introductory APR promotion to do balance transfer finance large purchases or apply for financing.
You could also take advantage of the generous benefits that travel credit cards offer, like welcome bonuses, which can help you earn thousands of miles or points.
Are There Risks To Having Multiple Cards
While there are clear benefits to having multiple credit cards available, it can cause more harm than good. These are potential pitfalls that you should be aware of:
It is possible to be tempted to overspend.
You can accumulate more credit card debt as you have more credit. High credit limits can encourage you to return to old bad habits if you have had past spending problems. If this is the case, then fewer credit cards might be better or none at all.
You can limit your spending by treating your credit card as a debit card and only paying what you can afford each month. It’s always a good idea.
Follow a budget and create a budget to avoid spending too much on unnecessary things. To avoid interest charges, set a monthly goal to pay your bill ultimately each month.
Organization can be complex: It can be hard to track all due dates and balances when you have multiple credit cards. Inadvertently missing a payment can result in a late fee and even a penalty.
Penalty APRThis can increase the debt’s cost. If you do this, it can damage your credit. You’re more than 30 days late.
Some card issuers offer the ability to change the due date. This allows you to keep all your payments on or close to the same date.
You can also set up automatic payments to avoid late payments. To avoid any overdrafts and returned payments, ensure that you have enough money in your checking account.
It can get expensive: It can be costly to keep many cards with annual fees. You should ensure that your reach card has enough value to make up the annual cost.
How Can I Chose The Best Credit Card
There is no one best credit card, so it is essential to understand yourself and your needs to choose the right credit card. Here are three factors to help you determine which credit card to get:
- Credit score: Rewards cards usually require excellent or good credit. This starts at a FICO(r)Score of 670. Before you apply, check your credit. Make sure you are eligible. Consider cards suitable if your score falls below this thresholdFair credit or poor credit.
- Spending habits compare rewards cards to understand where your money is spent most often and Maximize your earnings.
- Preferences: Consider whether cashback is more appealing to you than the potential value of a card that allows you to travel.
How many credit cards should you have? Let us examine the consequences of having more than one credit card
Drawbacks Of Having More Than One Credit Cards (should i have more than one credit card)
You have more accounts to manage: Your finances become more complicated every time you add a new credit card to your wallet.
Another bill is due, making it more likely that you will miss a payment. However, auto-pay can help to mitigate this risk.
You need to monitor it for fraud. You won’t have any problems if you only have one or two cards. It becomes more challenging to manage multiple accounts. You can lose money if you make mistakes or miss payments.
It becomes challenging to get a new credit card: You might be used to having your applications approved quickly because of your excellent credit score. However, this will change as you get more cards.
You will get to pay more annual fees: Many of the credit cards with the most perks, and especially the most popular travel cards, carry annual fees.
If you use the card often and get a lot from it, it is easy to justify paying an annual charge. If you have multiple cards that charge annual fees, you should carefully consider whether they are worth the cost. Even if you answer yes, it can still be expensive.