The pros and cons of having multiple credit cards

Is more than one credit card a good idea?

Credit card use is widespread. Whether you have a credit card for the points, convenience or to use when you’re abroad, you’re one of many taking advantage of the global credit market. However, for many of us one card is just not enough and we tend to have two or three in use at the same time. But is more than one credit card really a good idea? Would it be better to find a loan that was cheaper overall and consolidate our debt?

The cons of multiple credit cards

We tend to spend more when we buy with credit cards. According to data from the UK Cards Association and the Bank of England, the average purchase via credit card is 39% higher than the average debit card purchase. So if you have multiple cards and you’re regularly using all of them you could be spending more than you might if purchasing with a single debit card.

Multiple cards could get out of control. The more cards you have the more management is required in terms of making repayments and monitoring balances and rates.

Dormant cards could damage your credit score. The danger with multiple cards is that some of them just don’t get used. Cards that become inactive could create issues with your credit score. That might result in limiting your choices of borrowing to loans for people with bad credit or loans with no credit check.

It’s easier to run up more debt. The more credit cards you have, the more debt you could potentially find yourself in. It takes a lot of discipline to clear balances on time and ensure you don’t spend what you can’t afford if the credit is available.

Multiple credit card applications could also damage your credit score. If you want to apply for multiple cards it’s better to wait some time in between each application. Otherwise potential lenders may interpret a sudden burst of applications as a sign of financial difficulties.

The pros of multiple credit cards

Different cards for different uses. With multiple credit streams you can separate out their uses – for example, you could have one card purely for online purchasing or another only for expenses related to the car. This can make staying in control of your finances simpler.

Most cards offer rewards. From cashback, to gift vouchers, the more cards you have the more rewards you could potentially generate.

Taking advantage of deals. One of the main motivators for using multiple cards is to access different deals on interest rates. Some cards offer lower (or zero) rates on balance transfers, others on purchases. With multiple cards you can structure your finances so that you always use your credit interest free.

You’ll always have a card when you need it. Whether you’re travelling overseas or paying for shopping, not all cards are accepted in all locations and stores. Multiple cards will ensure that you always have options wherever you are.

Multiple cards give you a back up. While you’ll need to monitor multiple cards regularly so you can spot signs of fraud in any of the accounts, if you do find something then with more than one card you always have back up. It can take weeks to get a replacement card where there has been loss, fraud or theft so if you have multiple cards you’ll have back up options.

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