With the rapid growth in the popularity of credit cards, it’s not unheard of for an individual to own more than one card. In fact, the rise in the number of people owning more than one card has corresponded to the growth of the credit card market.
Having multiple credit cards can be beneficial, such as providing a low credit utilization ratio, more rewards, and greater purchasing power. However, if you have a credit card and are considering applying for another, you need to be aware of certain points. Check out the points below and give yourself the luxury of a seamless credit card experience.
How to Know What is the Best Number of Credit Cards for You
The best number of credit cards to have is a personal preference. Some people believe that having more than one card will help them build their credit score and will give them more flexibility in the event they need to use a card for an emergency.
Others believe that having more than one card will just lead to more debt and make it harder to keep track of all the payments.
Advantages of Having Multiple Credit Cards
- A higher spending capacity: With an increase in the number of credit cards, your credit limit also increases. Thus, you have some extra spending power that can be used to finance your high-value purchases and additional expenses.
- Balance transfer installation:If you have further than one card, you can transfer the outstanding balance from multiple cards to a single bone and also repay the quantum on that card as per your convenience. This is called the balance transfer installation.
- A boost to your credit score:Using multiple credit cards gives you a real occasion to maintain a low credit application rate on each of them. And a low credit rate is one of the most important factors that decide your credit score.
Disadvantages of Having Multiple Credit Cards
- A potential debt trap: Because a combination of multiple credit cards give you access to a higher credit limit, you may tend to use them recklessly and buy stuff that you don’t really need. Thus, you may fall into this tricky debt-trap and struggle in striking the correct financial balance.
- Your credit score may drop: Because multiple cards also mean multiple payment liabilities, at times you may miss out on paying your dues and thus cause your credit score to drop. Thus, you must be ready to shoulder the additional financial responsibility once you plan to get multiple credit cards.
- Associated charges: You would be aware of the multiple fees and charges that your credit card carries. Among these are the joining fee, annual fee, late payment fee, cash advance fee, reward redemption fee, etc. So the more the number of cards, the higher are their fees and charges.