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Many individuals wonder how many credit cards they should have. While calculating their finances, having cards in your wallet as a safety net in case you don’t have enough cash to make an emergency purchase is something we’ve all had to depend on.
There is a widespread misconception that having many credit cards will harm your credit score, and this is true if those credit cards are not used carefully. However, carrying many credit cards in your handbag or wallet will not hurt your credit score. If your money handles correctly, it may even help them. The trick is to understand how credit cards function and how many credit cards you can take.
There stands no right answer to the question, “How many credit cards should I have?” Instead, your financial requirements and money management determines the answer and your capability to manage repayments, balances, and spending cautiously.
So, what should you consider when deciding if you have the correct number of cards or whether you need to add another to your collection? Continue reading the guide and know all about it.
How Many Credit Cards Should I Have?
It’s beneficial to have several lines
To raise your credit score, having many credit cards is a simple and effective way to do it. If your debt-to-credit utilisation ratio is more than 30 per cent of your available credit limit, your FICO score defines your overall worth; if this ratio is less than 30 per cent, you’re considered a risk.
The most apparent advantage of having multiple cards is receiving more rewards, whether in the form of airline miles or cash. In this instance, credit cards may use to earn money. However, if you get too many credit cards and accumulate too much debt, interest will offset the benefits.
Finally, for self-employed and freelance contractors, having a company credit card distinct from your one makes bookkeeping simpler since all business transactions are recorded in one account.
But wait, there aren’t too many lines
When you establish a new credit card, you diminish the length/age of your credit history, which influences your FICO score. Furthermore, every new credit card application triggers a “hard inquiry,” which may lower your credit score by up to five points.
These are just momentary inconveniences, but if you keep opening new cards, it may become a problem. Meanwhile, having too many credit cards creates an even more significant problem: clutter. Consider how having a beautiful, clean Ridge wallet removes a lot of the mess from your old wallet, and then compare that to someone who has eight credit cards. If you use all eight cards, you have eight special payments each month, making it simpler to forget or go deeper into debt.
Too much credit card debt is no laughing matter
While we’re extolling the virtues of credit cards, it’s vital to note that carrying too much debt may have significant effects. According to research by personal finance business NerdWallet, as reported by Time, the typical American family has $16,061 in credit debt, which has been continuously climbing over the years. It is also likely to rise more, given that the more credit debt you have, the more interest you will accrue.
A low credit score might hinder someone from buying a house, getting a loan, or renting an apartment. Enjoy credit cards safely. Don’t take on too much debt.
We believe that 3 is a good number
According to Forbes, LowCards.com CEO Bill Hardekopf believes there is no magic number for the optimal number of cards. However, among the many schools of thinking, we may reach a pragmatic conclusion: holding three cards is a reasonably decent bargain.
Here’s why: three isn’t a lot to remember, and you can use all three for various things. You should, for example, have one “normal” card that you use throughout the month and then pay off every month. The second card may be a “speciality” card, such as an airline miles card that can only use to purchase aircraft tickets. The third card may use for irregular purchases, just once in a while, and then paid off quickly to boost your credit score.
Find your favourite after experimenting with various possibilities, but always approach with care. You may ruin your credit score in seconds, but it will take years to fix it.
What Are the Advantages of Having Several Credit Cards?
There are various advantages to having more than one credit card. Get benefited by doing the following-
Increase your credit limit
Your credit utilisation, or the proportion of available credit on your credit cards and other revolving debt, is the second most significant component of your FICO® Score. Your credit scores will benefit from a reduced usage ratio. When you add a new credit card, you boost your available credit, which may lower your usage ratio—as long as you don’t raise your spending.
Increase your prizes
If you’re a credit card rewards lover, having numerous credit cards may help you maximise the amount of cash back, points, and miles you receive. For example, one card may provide good dining benefits but not groceries or petrol. The more cards you have, the more points you’ll accumulate over a year.
Take advantage of additional benefits
Some credit cards provide bonuses in addition to their rewards scheme. For example, you may be able to utilise an initial 0% Annual Percentage Rate deal on a new card to execute a balance transfer or finance a significant purchase. You might also take advantage of the powerful incentives offered by travel credit cards, such as initial bonuses of tens of thousands of points or miles.
Conclusion
As long as you handle your credit cards wisely, having many credit cards may help your financially. Because financial demands and requirements differ widely from person to person, there is no straightforward solution for the optimal amount of cards to carry. The information above should help you decide whether or not to add extra cards to your wallet.
