Credit cards are good sources for seeking temporary credit from banks. Yet, many financial experts believe credit cards harm their owners.
Credit cards are often responsible for high spending patterns. For this reason, debit cards are generally recommended over credit cards. But credit cards are perfect for those who earn enough to pay off their bills on time. There are several advantages to credit cards and online credit cards. Thus, people are often tempted to have not one but multiple credit cards.
Often, users get confused about whether to get a new credit card. So, if you’re wondering if having a lot of credit cards is a good idea, we’re here to help!
Can a person have multiple credit cards?
Having several credit cards could be a boon if taken care of. You must meet certain eligibility requirements to own multiple credit cards. All banks allow their customers to own more than one credit card. Each application for a credit card gets considered with the utmost care. Hence, each of the applications has a chance of getting approved.
- Few individuals have a good track record and credit score. Several banks approve many of their credit card requests.
- Different credit cards have different eligibility criteria.
Different credit cards have different kinds of perks. For example, a travel credit card could help pay off all your travel expenses. But a Sodexo card can help pay for groceries. Having different cards with different benefits helps users.
A few things you must know
- An individual can handle 2-3 credit cards only if each of the cards has a unique benefit.
- Having more than three credit cards is not recommended. But a responsible person can own them.
- If managing a single credit card seems difficult, then do not apply for many credit cards.
- Banks do not care about the number of credit cards an individual has if they are paid on time.
- For entrepreneurs, separating personal and business credit cards is a must. You can have better financial modelling and distribution. But how? By having separate cards for business and personal expenses.
- The number of credit cards affects creditworthiness. Hence, they can seek a loan from the bank by decreasing the amount.
- Suppose an individual cannot pay off the bill for one of the cards. Then he/she can pay off the bill of one of his/her cards with another card. This helps avoid unnecessary delays, deadlines, and fines.
The Benefits of Having More Than One Credit Card
Have a look at the benefits of having more than one credit card.
It’ll increase the credit usage score
The credit utilisation score is the score given based on credit utilisation. Every credit card has the largest credit limit. Using more than 90% of a credit limit lowers the credit utilisation score. But using a credit card with up to 50% of the limit helps raise your credit utilisation score.
It helps increase your credit score
Some individuals have more than one credit card. It ensures that they pay the bills on time and boosts their credit score by a great margin. Having multiple credit cards can help boost your credit score. But many credit cards come with the responsibility of paying the bills on time.
Increases credit limit
Some individuals have high monthly expenses. We recommend owning many credit cards. Often, the expense cannot be covered with the liquid funds available. For this reason, having many credit cards could be an added advantage. A credit card can cover all the expenses. But you must ensure that you pay off the amount on time.
Higher rewards and cashback
Credit cards come with several benefits and rewards. There are several types of credit cards, such as travel cards and grocery cards. These help you get cashback, discounts, and perks. The more credit cards you own, the greater the benefits you enjoy!
Disadvantages of having many credit cards
Here are the disadvantages of having too many credit cards:
It’s difficult to handle so many credit cards
Having more than one credit card requires careful financial planning. One needs to track the billing cycle of each credit card. Individuals with many credit cards would get flooded with bills at the end of every month. Keeping track of each bill and paying it off without delay could be a hassle.
Unnecessary debt accumulation
Having many credit cards gives the owner the freedom to spend too much. Overspending can result in a vicious cycle of debt. Online credit cardholders must ensure that they do not spend too much.
To improve your credit, how many credit cards should you have?
This is a personal decision about what you can afford. To begin building credit, you actually only need one credit card.
Using your main card for regular purchases is a great way to steadily and consistently build credit over time.
It may be helpful to add several cards if you have plans for heavy investments or purchases soon and know you want to establish your credit quickly. This is especially true of cards with specific loyalty programmes because you can keep track of them in a more organised and categorised way. With annual fee cards, you have yet another chance to pay off the debt on time and regularly.
Are you someone who excels at fund and credit management? Then having multiple credit cards could be a benefit. Many credit cards come with the responsibility of paying the bills on time. Are you sure that you can pay off the bills without getting fined? Then a credit card would provide a sense of financial security.
Are you planning to have many credit cards? Then consider all the benefits and risks associated with them. Also, ensure that you make a wise, well-informed decision. If you have any doubts, consult a financial expert like Piramal Finance. We offer customised solutions for business owners and professionals and help you avail of easy credit card and personal loan solutions.