Are Multiple Credit Cards a Good Idea?

There are many people that have more than one credit card. There are lots of reasons why they might have this, but it is wise to think through the advantages and disadvantages of having more than one. You may decide that you would rather have less cards or that you should apply for more. Have a think about the consequences of each before you decide.

Having a lot of credit cards may mean that you have access to more credit. This is because each card will allow you to borrow up to a certain amount of money. However, lenders will look at your credit record when deciding how much to allow you to borrow. They will not want you to borrow so much money that you will not be able to manage the interest repayments. This means that they will limit what they lend. You may find that you could potentially borrow as much on a singular card as you could on a selection of cards, if you just spoke to your credit card company.

You may like to keep your cards for different types of purchase. This makes sense for cashback cards as some may give you cashback for certain types of purchases and some for others. However these are rare. If this is the case though, do be careful. Cashback cards tend to have very high interest compared to other cards and so only use them if you can make the full repayment each month, otherwise they actually could work out more expensive than other cards.
You may have some cards associated with certain stores where you can get loyalty points if you use them in store. Then if you shop somewhere else you use a different card to get loyalty points from there. This makes sense and as long as you pay them back in full and carefully keep an eye on what you are spending, you should be able to get a good lot of points. However, like cashback cards, these cards tend to have high interest and so you need to make sure that you pay them back in full each month to take advantage of the savings that you are making.

There is always the risk that if you have multiple credit cards that you might forget to pay them or that you may find it difficult to keep track of your spending. Therefore it is important to keep an eye on how much you owe on all of them. It is also wise to set up a direct debit to pay the full balance of each every month. To make this affordable, set the direct debit to come out just after you have been paid so that you know that the money will be there to be able to afford it.

You may find having lots of cards encourages you to spend more money. It is possible that you will think that you have access to a lot of money that can be spent, rather than thinking about the fact that the money is not yours, but is only lent to you and will cost you money to pay back. It is easy to forget about the costs of borrowing and how much the interest will be if you do not pay off the cards in full each month.

So multiple cards can be good for some people, but it is worth being wary. If you use them to get free interest or loyalty points then it is worthwhile. However, it can be easy to get into a muddle with regards to how much you owe and when each should be paid, so if you do not have a good reason for having more than one card, then it could be sensible just to stick to one card and try to get a higher credit limit on it if necessary. Remember to pay off each card in full to avoid interest or if you have too much outstanding debt, slowly pay back a bit extra each month until you eliminate the debt. It is worth comparing the interest on the different cards and paying off the most expensive first, so that you save as much money as possible.