A credit card is a payment card issued to users to enable the cardholder to pay a merchant for goods and services based on the cardholder’s accrued debt.
If used with care Credit cards can be an excellent tool for managing your financial situation. But what number of credit cards are you required to have? For some just one credit card is sufficient however, others might prefer a few or more.
The amount of cards you must carry is contingent on the circumstances of your life and goals.
The application process for credit cards can affect your credit score
A lot of people aren’t happy with to apply for several credit cards as it can affect the score of your credit. If you are applying for a new credit card, your credit score could suffer a loss of 5 or 10 points.
Although you have multiple credit cards, it’s acceptable, it is best to make sure you spread out your applications to ensure that your credit score has the chance for recovery from hit.
This is crucial in the event that you intend to apply for a substantial loan, like a mortgage, in the near future. They don’t want it when you try to obtain credit regularly and it could indicate that you’re having problems managing your finances.
What Are the Benefits of Having Multiple Credit Cards?
There are many ways that having several credit cards may help you. A few of them are:
Expand your credit line.
The second factor that is most important that affects an individual’s FICO Rating is how much you use your credit which is the amount of credit you’re using for your credit cards as well as other credit cards. The lower your ratio of utilization the better for the credit score. Each time a new credit card that you open you’re expanding your available credit, which could reduce your utilization ratio, so long as you don’t expand your expenditure.
If you’re a rewards lover, having multiple credit cards will allow you to maximize the amount you earn in points, cash back and miles. One card, for instance, might offer great rewards at restaurants, however it’s not available for fuel or food items. The fact that you have more than one card can allow you to earn more points than if you purchase everything with only one card.
Get the most benefit from other benefits.
Certain credit cards have advantages that go beyond the rewards program. For instance, you might have the option of using the introductory 0 APR promotional offer to make the balance move or to finance a huge purchase. You could also avail the advantages you can enjoy with the travel credit card, including promotional bonuses for introductory purchases that could bring you thousands of miles or points.
Is It Good to Have Multiple Credit Cards?
The benefits of having the use of multiple credit cards will ultimately depend on the card holder as well as how responsible financially the card holder is financially responsible. According to Experian The Millennials own on average 2.5 cards, whereas Baby Boomers have an average of 3.5.
Some prefer not having credit cards and stay clear of the desire of spending money that they do not have. Some people are happy with just one card that earns cashback and others have two cards that serve different functions – one to cover everyday expenses, and another to be used for dining out special occasions or other travel adventures.
Certain people (*cough*our whole staff*cough*) take pleasure in the pursuit of maximising rewards, and travel reward points particularly. Our veteran experts in our team keep binders packed with credit cards and spreadsheets that manage annual fees and payment due dates for the month. There are many paths to consider when it comes to credit card ownership, however it’s the individual cardholder’s choice of the best and most number of credit cards they will need.
How Many Credit Cards Should I Have?
The number of credit cards you need to have is dependent completely on your personal situation in terms of finances and your spending habits. The most important question to consider is whether you will be able to pay the entire balance on each card every month. The accumulation of multiple cards is an immense amount of responsibility. If you are unsure of your capacity to cover each month’s balance it may be wise to stay clear of collecting several cards at this point. In the long term it is always better to avoid the urge to continue spending.