There are pros and cons of having more than one credit card, here are some things you should consider.
Based on a study conducted by Stats Canada, it is estimated that on average each Canadian has three credit cards. There are pros and cons of having more than one credit card, but there is a fine line between being able to manage them responsibly and potentially damaging your credit score.
If you’re thinking about increasing or decreasing the amount of credit cards that you own, here are some things that you should consider:
Having various credit accounts can offer freedom and flexibility when it comes to paying off debt and spending within your credit limits. If one of your cards gets lost or stolen, it’s a good idea to carry a backup in case of an emergency. In addition to this, the abundance of different features that credit cards come with today might mean that you use one strictly for cash back, and another for travel points or for better product warranties.
It’s easy to run up debt when you’re using multiple cards. Whether you’re dealing with one or several, the most important thing to consider is how responsible you are at repaying your total balance. Missing due dates could result in costly late fees, increased interest rates, and damage to your credit score.
Although paying your fees every month can be tricky when you have more than one line of credit, it’s essential to prevent unmanageable debt. If you do have several credit cards, a great tip is to spread your borrowed money evenly across each account. If you’re actively using all of your accounts and ensuring that they’re paid off monthly, the percentage of your debt will stay low and your credit score will be protected.
Although it only takes one card to build up a credit score, owning various cards is a great way to show lenders that you’re capable of managing multiple accounts. If you’re well established at handling a wide variety of loans, from credit cards to a mortgage, issuers will be more likely to approve you for future investments. As well, trustworthiness looks great on a credit report.
Having multiple credit cards can help you maximize rewards, maintain flexibility and diversify your credit profile. However, keeping track of your spending is important to prevent financial damage from occurring. Before you decide to cancel or apply for a credit card, it’s important research every variable that could affect your credit score. This will ensure that you know which options will compliment your spending habits.
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