According to research, more than half of the population in North America owns two or more credit cards. In fact, it is believed that many citizens of the States carry between five and 10 at any one time for a multitude of things like instalment loans. There are obvious reasons why people wouldn’t want to carry multiple cards but it is often suggested that if you can handle multiple credit cards then it is at your discretion. See what you think after reading these advantages and disadvantages.
- Rewards – Options are always a good thing. And, most credit cards offer rewards for different things. What this means is that you could have one for gas, another for clothes shopping and another one for your groceries.
- Options – Usually, when you use a website to search for the lowest interest rate cards, you will that there are features to them that entice you. These features may be across multiple cards, and it is well worth consideration.
- Balance transfer – You may have a debt on a huge interest rate and by being able to move this around then you will be better placed to cut your repayments.
- Good credit score – If managed well, and this is a big if, multiple credit cards will aid your credit score.
- Strategy – Just back in April, the chief technology officer at SlickDeals.net, Vitaly Pecharsky, explained that he has credit cards – different ones for each life situation – and this has seen him reap thousands of dollars in rewards each year.
- Financial Safety – Many experts have called for people to have a credit card with zero balance in a safe place so that if anything bad does happen then it will be easier to initially deal with it.
- Falling behind on payments – The management of all of these credit cards is crucial, and if you don’t keep on top then you could miss a due date. Any late fees could throw you completely out of sync. Find a way of giving yourself payment reminder or automated payments.
- Adverse effects to credit score – While it can aid your credit score, there is a chance that it can be bad for it. If it is quite obvious that you are basically bailing yourself out then this will raise a red flag.
- Temptation – Many of us are good at holding off on temptation, but it’s even easier when there is nothing there giving you ideas. Know what you can afford, switching money around various credit cards isn’t helping you. If you can’t buy a new plasma TV, don’t – but that can be easier said than done.
- Interest Payments – Don’t get multiple credit cards and then spend more money on payments than you have to. Keep the use to a minimum and if you are consolidating debt, stick to the plan.
- Debt-to-Income – This is an absolutely crucial point. More credit doesn’t mean more money. Draw up a plan and understand how much you will be able to pay back. You should always stick to a balance of less than 30% of the limit for each credit card.
What do creditors think?
Generally speaking, when applying for a loan, the number of cards you hold isn’t important to the lender. What happens is that they tend to look at the total debt accumulated combined with the credit you have on your account. Additionally, it is advised to keep all credit cards open – even if you don’t use them – because it can reflect poorly.