With the intention of either chasing rewards or building a higher credit score, some people will suggest owning several credit cards. People ask questions like; how many credit cards do i need to have? It all depends on the fact. Ideally it all depends on your finances, goals and lifestyle.
Having multiple numbers of cards will improve the way you earn the maximum benefits and rewards available on every purchase you make with a credit card.
As you build your portfolio, you need to understand how each card can enhance your life. Having a strong line of credit, along with a low credit utilization rate, will allow you to make a larger loan with a lower interest rate when buying a car or home later on.
You can achieve it with just one card, maybe. On the other hand, some people handle multiple numbers of cards successfully while pursuing different rewards offered by different cards; it may be the reward of traveling, eating or shopping. Some cards offer more specific rewards than others.
Reasons Why You Consider Multiple Credit Cards
If you don’t see the need to use multiple cards, you may be damaging your credit score. In addition to the help offered to your budget, using multiple cards ensures:
- You can have a separate credit card just for traveling, dining or shopping online. This can help you keep track of your spending and allow you to keep an eye on identity theft or fraud. For example, an American Express credit card offers the best travel rewards, someone who travels a lot can own an Amex credit card and use it to earn travel rewards. But don’t be fooled into opening too many duplicate benefit credit cards just for bonuses.
- You have a backup if one of your credit cards is misplaced or lost. It helps to prepare a backup card. Some high rewards cards may take more than a day to replace and you may need a credit card at that time. Therefore, at least a second credit card is recommended.
- You can have additional cards as a backup when traveling or visiting new places . This is useful if your primary card is not accepted wherever you go. It is good to always make backups to avoid surprises.
How to Manage Multiple Credit Cards
If you find it difficult to manage multiple cards, here are some ways to do so.
- Be strategic with interest charges. This is for people who already have more than one credit card. By transferring your credit card balance to a new card that has a lower promotional rate, you can save your money.
- Set up automatic payment reminders for all your cards. Paying on time is the most important thing to do, you can set up reminders on your phone. After missing any payments, you will have to pay with interest of about 1% or 2% depending on the card you use. In managing your monthly credit card bills, it is important to make at least the minimum monthly payment on or before the expiration date.
- Don’t spend all your credit. If all available credits have been used then the credit limit has been reached. It is recommended to keep your usage rate at 30% even if it has not been poured on the stone, you can always use it as a benchmark. In addition, it is highly recommended to check your credit score regularly to keep track of how your actions affect your credit history.
Bad Credit Card Habits
Many bad credit habits are a barrier to having a bad credit score . However, if you follow certain practices, you can avoid this situation. These practices include:
- Carrying the balance from month to month: this practice turns financial problems into a huge disaster that will cost you thousands of dollars in unnecessary interest payments.
- Don’t have a budget to keep track of expenses: just track your expenses and make sure every purchase is within budget because not being able to keep track of your expenses is where everything you avoid starts.
- Using too many credit cards than you should. Imaging pays an annual fee for cards you don’t use. It doesn’t make sense and that can only be recorded as a loss to your financial well -being.
How Many Credit Cards Should You Have?
Ideally the number of credit cards you should have depends entirely on your staff, lifestyle, situation and financial history. Some individuals stay good with one and others can thrive with a few cards.
Furthermore, rest assured that the more number of cards you have the more responsibilities you have. Resist the temptation if you can’t pay off every balance every month, it’s best to open a credit card account from time to time. Take all the time you need and make sure you are strategic about the credit card accounts you open as you build your credit score.
Having one credit is practically mandatory, it allows you to take advantage of the benefits and security that are embedded. But to justify having more credit cards can depend on whether you need additional credit channels to cover your monthly budget.
Lastly, since there is no absolute number to answer the question of how many credit cards you need to have, then it is best to only apply and bring only the cards you need and can allow use based on your credit score, ability to pay the balance and rewards you want to achieve.
Some Types of Common Credit Cards
Although there are several types of credit cards out there. Yet they all have one thing in common; they allow consumers to carry the balance from month to month and repay the loan from time to time.
- Gas Card – if you buy petrol on the same network every time you can benefit from this card. Rewards can include petrol price reductions or cash rewards after reaching a certain level of spending.
- Guaranteed Cards – secure cards are mostly used by individuals who have a damaged credit record, it can help someone rebuild. For the thesis car type, credit is low from the beginning but there is a tendency to grow over time.
- Rewards Card- this is a credit card that comes with a specific type of reward, depending on the manufacturer, the reward may come immediately with a percentage of cash or long-term return as double mileage for the purchase of groceries, gas or utilities. Most of these rewards cards have higher annual rates, higher interest rates and reward limits which means your rewards are not free but at a cost.
- Retail cards – Make sure you know if these cards are only for use at certain stores or they are available for use anywhere. Cardholders receive a discount when they use a credit card. The card may also include online shopping offers. Also, make sure you look at higher interest rates.
- Premium Rewards Card – this card is only for those who spend big, those who travel often, and are responsible for paying off their credit card at the end of each month. Premium cardholders are eligible for every award imaginable, including free flight tickets, concierge services, priority baggage handling, travel insurance, cash back and no foreign transaction fees. They also offer unlimited tours to the VIP airport lounge. However, it comes with a cost. Annual fees can be as high as $ 500
- Balance Transfer Card – credit card balance transfer is usually used by customers who want to transfer debt to another credit card with a lower interest rate. It gives users a way to become debt free faster by making more repayments you reduce debt instead of interest. Also, note that you cannot transfer balances between two cards from the same bank or issuing company.
- Low Interest Card – very similar to a balance transfer card in terms of using low interest rates as an incentive to help control debt. Users can save on the entire interest payment by transferring the balance on this card. The downside is that low interest rates expire and you must have an excellent credit score to qualify for one.
Recommendations for People with Multiple Credit Cards
If you have multiple credit cards, there are certain steps you must take to get the results you are looking for. These steps include:
- Opening a new account is not the best way to build your credit score. Having a higher credit score is not based on the number of cards you use; you can have a better credit score with two cards than someone with four or five cards.
- The best way to build higher is to avoid the bad credit card habits we mentioned above. Also, some of the best techniques for you to use are making sure you don’t miss your payments, chasing overdue accounts, avoiding expensive credit repair companies and by paying revolving account balances.
- Occasionally use all of your cards so you avoid having cards you don’t use. It is advisable to contact your card issuer to find out what will cause your card to be inactive so that you can avoid it. Having an inactive credit account can jeopardize your credit score.
- It’s easier for you to get into debt unknowingly when you use multiple credit cards. So, make sure you are always vigilant with the amount you have borrowed and make sure you pay on time.
- Do not apply for multiple credit cards at the same time. It can harm your credit score and if you buy a car or house in the same period, this may mean you may get less favorable loan terms than you expected.
- Know go is right to file for bankruptcy. If your credit card debt rises too high for debt consolidation to help, you may want to consider filing for bankruptcy.