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Here is how you can decide the number of credit cards you should own


How many credit cards can you own? The answer depends on the manner in which you use your credit card. If you are a responsible user, you can have as many as you want. Alternatively, if you are a reckless user, it is better not to have even one in your hands. You can use them to your benefit only if you know how credit cards work. It can help you decide the number of credit cards you should own.
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Different cards for different uses

Not all credit cards are the same. Some cards come with an initial 0% APR whereas some come with exciting cash-back or discount offers. Specific cards come with discounts when you use them for refueling your car. Some credit cards offer travel miles when used for booking air tickets. Check out what type of user you are.


The need for having multiple cards

A card that offers fuel discounts is not beneficial when you use it for online purchases. Similarly, a cash-back card does not serve the purpose when you book air tickets. Therefore, it makes sense to have specific cards for specific uses. Now, the question again veers towards how you use the cards, especially in matters concerning repayment.

How should you use a credit card?

The golden rule in using credit cards wisely is that you should pay the credit card bill in full every month. It is not advisable to carry forward balances to the subsequent months. Doing so entails that you lose the benefit of the interest-free period. Your dues start accumulating whereby you could end up paying massive amounts as interest and risk affecting your credit rating.

Factors that affect credit rating

Credit cards can affect your credit rating in various ways. Defaults in payments have a direct effect on your credit ratings. Making partial payments also affects credit rating because it increases the credit utilization ratio. However, having multiple cards is helpful in this regard, as it reduces the credit utilization ratio. The score also depends on the age of your accounts. Therefore, the older your credit card account, the better it is for your rating. Another factor that affects the credit ratings is the number of hard inquiries on your account. Every card you apply will result in the credit card issuer making a hard inquiry to determine your eligibility. It affects your rating, especially if there is a denial of the credit card application. Having more credit cards is beneficial to your score if you use your cards wisely.

Benefits of having more number of cards

  • Many cards offer valuable sign up bonuses some of which can be attractive.
  • The more you use your credit cards, the more rewards points you get on your purchases.
  • If you travel frequently, have a couple of cards exclusively for booking air tickets and hotel accommodation. Redeem the travel miles when you book subsequent journey tickets. These cards also give you access to airport lounges.
  • Have a separate card for refueling your car. Use the valuable fuel points to earn free fuel and save money in the bargain.
  • A specific card for online shopping is ideal, as you can use it to accumulate cash-back and discount offers from online ecommerce retailers.
  • Having a separate business credit card can help you to segregate the personal expenses from your business dealings.
  • Multiple cards are handy when you lose one or have specific issues with the card-issuing bank. You have an alternate payment method ready on hand.
  • Having multiple cards also helps in transferring balances from one card to another to avail the benefit of lower APR.
  • Demerits of having multiple cards
  • If you do not know how credit cards work, it is not advisable to have multiple cards. You will end up piling more debt than you could afford to repay. Take time to understand how credit cards work.
  • Having multiple cards requires you to keep track of the payments regularly. Missing one payment can land you in trouble.
  • Multiple cards make it difficult for you to resist the temptation to purchase things that you do not need.
  • Final thoughts
How many credit cards can you have? If you know how to use your credit cards, you should not have any problem with the number of cards you own. Secondly, using a credit card is like driving a car. It does not matter how many vehicles you have. If you are a safe driver, the risk of accidents is always low. Learn how credit cards work to enjoy the full benefits of owning multiple cards. Use them wisely, make your payments in full every month, and see your credit rating improve.

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