Santa Claus comes around just once a year. In the meantime, there are Credit Cards.

How Many Credit Cards Should a Person Hold?

With the rapidly growing popularity of credit cards, individuals owning multiple cards isn’t unheard of. In fact, the rise in the number of people owning more than one card has been proportional to the growth in the credit card market itself.

Having multiple credit cards give you benefits like a low credit utilization ration, more rewards, higher purchasing power, etc. However, if you own a credit card and are considering to apply for one more, you need to be aware of certain points. Check out the points listed below and gift yourself the luxury of a seamless credit card experience.

Advantages of having multiple credit cards

The primary advantages of owning multiple credit cards are as follows:

  • 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 facility: If you have more than one card, you can transfer the outstanding balance from multiple cards to a single one and then repay the amount on that card as per your convenience. This is called the balance transfer facility.
  • A boost to your credit score: Using multiple credit cards gives you a real opportunity to maintain a low credit utilization ratio on each of them. And a low credit ratio is one of the most important factors that decide your credit score.

Disadvantages of having multiple credit cards

A few potential disadvantages of having multiple credit cards are listed below.

  • 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.

The ideal number of credit cards

There is no ideal number as such that can be recommended to any individual when it comes to credit cards. Although having a few cards can be a real blessing, too many of them is not a desirable thing as you can spell trouble in ways more than one. This is a subjective decision and demands your discretion to arrive at the correct number.

Points to remember while assessing your need for multiple credit cards

  • Check if there is a real requirement: It’s of prime importance that you are certain about the need for another credit card in your name. This would also help you in choosing the right type of card that would fulfil your purpose.
  • Don’t get lured by introductory rewards: If you already have a number of credit cards but are applying for another one only for the attractive introductory offers that it carries, you should refrain from proceeding with the application process.
  • These one-time offers and benefits: should not be the biggest reason for any individual to apply for any card. In the long run, these momentary offers would no longer serve you and the card can add to your financial worries.
  • Check your credit score: A high credit score is a must for applying for a credit card and getting the application approved. So if you have consistently maintained a desirable credit score, you can effortlessly have multiple credit cards.
  • Assess your repayment capability: Having multiple credit cards is one thing, repaying the dues is another. Don’t bite off more than you can chew and be careful not to overestimate your repaying capabilities and underestimate the consequences of failing to make the payments. This, in turn, would give you a rough idea of the maximum number of credit cards that is ideal for you.
  • Be aware of the additional responsibility: Using multiple credit cards also means that you have to perform some degree of financial juggling in managing to repay the dues that you owe on all of them. Apart from arranging the repayment funds, you would also need to remember the due date for each card, the reward points expiry date, the card renewal date, etc.

Bottom line:

Having more than one credit card can really work in your favour, particularly when you are smart enough to handle them adroitly. You need to invest time in streamlining the whole process of handling the cards. Using multiple credit cards can also be a double-edged sword and you need to cover your bases before reaping the benefits.

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