What Are The Benefits Of Having Multiple Credit Cards
There are several ways using more than one credit card can benefit you. Some of the reasons include:
- Increase your available credit. The second most influential factor in your FICO® Score is your , or the percentage of available credit you’re using on your credit cards and other revolving debt. The lower your utilization ratio, the better for your credit scores. With each new credit card you add, you’re increasing your available credit, which can drive down your utilization ratioas long as you don’t increase your spending.
- Maximize your rewards. If you’re a enthusiast, using multiple credit cards can make it easier to maximize how much you earn in cash back, points and miles. For example, one card may offer excellent rewards on dining but not on groceries or gas. Having more than one card gives you the chance to get more rewards than if you were to make all your purchases with one card.
- Take advantage of other perks. Some credit cards offer benefits beyond their rewards program. For example, you may be able to use a new card’s introductory 0% APR promotion to do a balance transfer or finance a large purchase. Or, you could take advantage of generous benefits you can get from travel credit cards, such as introductory bonuses that can earn you tens of thousands of points or miles.
Opening A New Account
When you apply for a new credit card, the issuer will likely do a hard pull on your credit .
This allows the issuer to review your credit report and score when determining whether theyll approve your application.
Hard inquiries arent a major factor in determining your credit scores, and sometimes one hard inquiry wont have any impact.
Other times, however, a hard inquiry may lower your credit scores by several points. If this happens to you, dont worry too much: Your scores may rise back to the pre-inquiry level, or climb even higher, within a few months .
Still, its a good idea to take every credit card application seriously. Frequent hard inquiries, or a hard inquiry if you have an otherwise thin file , could have a greater negative impact on your scores.
What Are The Pros Of Multiple Credit Cards
Here are some benefits to having multiple credit cards.
- More credit card rewards If you open multiple credit cards, you can take advantage of a variety of reward programs. You may use a card that offers the most cash back on dining out at restaurants, and the card with the best travel perks on airfare or hotel purchases.
- By paying your card balances on time and in full every month, you can build and improve your credit. Better credit can lead to lower interest rates and more favorable terms in the future.
- Backups In the event one of your credit cards gets lost or stolen, itll likely take a few days to get a replacement card. With multiple credit cards, youll have backups to use in these situations.
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Applying For A Second Credit Card
As an existing customer, you can apply for a second MBNA credit card.
A second card could give you additional flexibility by using it for something specific, like a planned purchase, or to consolidate existing credit card debt from another lender .
Just bear in mind, transferring other more expensive debts to this card and paying only the minimum amount due each month may lower your overall monthly debt repayments, but it may take you longer and cost you more to repay what you owe.
A second card could give you the opportunity to take advantage of benefits, such as introductory offers. You may also be able to redistribute your credit limit between your existing credit cards .
Finally, a second card could come in handy if youre paying off a balance on your existing card, but would like to keep your everyday spending separate.
Disadvantages Of Being A Multiple Credit Card Holder
The cons of having multiple cards include:
- Annual fees: Be aware of having multiple cards that charge annual fees. Paying these fees may mean that the cons outweigh the pros that may come with the card, like rewards or points.
- Harder to stay organized: The more cards you have, the easier it can be to forget to pay a bill on time or keep track of credit limits. Delinquent payment behavior will have a negative impact on your credit score.
- Appear risky to issuers: Applying to multiple credit cards within a six month period can make you appear risky to credit card issuers.
- Easy to overspend: The more lines of credit you have open, the more debt you could accrue.
- Many hard credit checks: Every time you apply for a new card, your credit score will undergo a hard check by the issuer. Numerous hard checks can impact your credit score.
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How Many Credit Cards Should I Have If I’m In Debt
If you’re in debt, you should have one credit card at most that you use regularly, and that should be for essential expenses only. It’s best to avoid opening new credit cards, although there is one exception: You could get a card with a 0% intro APR on balance transfers to refinance credit card debt at a much lower interest rate. Note that to qualify for a balance transfer card, you will likely need good to excellent credit.
You don’t need to cancel any other credit cards you have. In fact, that may not be a good idea. Canceling credit cards will reduce your available credit, because you lose the credit limit of each card you cancel. This can increase your and hurt your credit score. For that reason, it’s better to store your unused cards somewhere and avoid using them.
How Your Credit Score Is Determined
Before we look at the basics of credit card ownership, it’s important to understand how your credit score is calculated. This can help you determine whether you carry too many credit cards or the few that you have are enough. Here’s a quick review of the key components of your credit score vis-à-vis the amount of plastic you carry.
Adding too many new cards when you have a short credit history reduces the average age of your credit accounts, which can drag down your credit score.
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How Many Credit Cards Should I Have If I’m Rebuilding Credit
You should only have one credit card while you rebuild your credit. Since previous mistakes have damaged your credit score, you should also be cautious about getting a new credit card, even after you’ve improved your credit. You don’t want to fall into the same patterns and have the same problems.
That doesn’t mean you need to go your whole life with a single credit card. But before you open another credit card account, make sure you’ve been practicing smart credit habits for at least two to three years. That means you only charge what you can afford, you stick to a budget, and you always pay your credit card bill in full.
Pursue Big Rewards And Welcome Bonuses
Pursuing big rewards and welcome bonuses can sometimes pay off, but its a risky game that not everyone can play wisely. Big rewards often accompany much higher annual fees and high credit limits are a tempting opportunity to spend more than necessary.
The clearest example of a big rewards credit card that could pay off for the right cardholder is the Chase Sapphire Reserve®. For its hefty $550 annual fee, cardholders get a $300 credit towards travel purchases paid for with the card each year, Priority Pass airport lounge access, primary car rental insurance when they pay for their rental with their card, premium trip insurance, Visa Infinite privileges and 50% more points value when redeeming points for travel in Chases Ultimate Rewards portal or through the Pay Yourself Back feature. Another popular credit card for those playing in the high end is The Platinum Card® from American Express. Similar to the Chase Sapphire Reserve, The Platinum Card has a hefty annual fee of $695 and hefty benefits, including a large welcome bonus.
Be careful not to make a high-fee super-premium card your sole credit card. Its best to pair one of these cards with a no-annual-fee card so cardholders can drop the high fee card if anything changes.
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What To Know About Applying For A Credit Card
Applying for credit cards is typically fast and easy. Most credit card issuers allow you to apply online and get a decision quickly. You can expect them to check your credit and income to make sure you can afford the card. Remember that every credit card you get will affect your credit. Many factors including your payment history will determine whether your card helps or hurts your credit.
When Is It A Good Idea To Have More Than One Credit Card
In some scenarios, having a number of cards is a good idea. If youre already in a healthy financial situation with minimal to no debt, multiple credit cards can open the doors to a better credit score and rewards.
Having more than one credit card is also a great option if youd like to track and separate your spending. You can use one card to pay for a certain type of expense like groceries and gas, and another to pay for everyday bills like utilities and car insurance.
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Disadvantages Of Having Multiple Credit Cards
- Difficult to manage: Having more than one card means keeping track of each billing cycle, credit limit and payment due date. This can get overwhelming and missing even a single payment due date can have an affect on credit scores.
- Can lead to unnecessary debt: Having access to more credit can often be tempting. This can lead to overspending and this will inturn add to debt. If cardholders are not cautions enough it can easily lead to overspending.
Can You Have Too Many Credit Cards It Depends
More than one or two cards might seem excessive to some, while others may open several new credit cards each year.
The largest collection of valid credit cards recognized by the Guinness World Records is held by Walter Cavanagh of Santa Clara, California, who has amassed a staggering 1,497 cards.
Extreme cases like Cavanagh got us thinking: How many credit cards does the average American have?
To figure out the answer, we reached out to several credit bureaus and analyzed anonymized member data from Credit Karmas more than 75 million members.
Why is this important? Because the number of credit cards you have and how you use them could impact your credit scores and finances.
Lets first dive into our findings. Then, well discuss how opening and closing accounts could affect your credit scores and whether its a good idea to apply for more cards. In any case, you can probably rest assured that the ideal number is below 1,497.
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Dealing With Too Many Cards
If you think you may have too many cards or have ones you no longer use, the worst thing you can do is start closing accounts without considering the impact on your credit score. Closing older credit cards can shorten your credit history, which can hurt your score.
Payment history on closed accounts eventually falls off your report, which can also hurt your score. Closing credit card accounts also reduces the amount of available credit, which can hurt your debt-to-credit ratio or credit utilization if you have outstanding balances.
It’s better to leave your credit card accounts open and just put these cards on ice. If you get a warning about inactivity from the card issuer, use that card just a bit to prevent the account from being closed. You can also keep that credit card as a backup, especially if it comes with a higher interest rate or a higher credit limit. Keeping this one in the wings can help you keep costs down and, if it has a higher limit, can keep your spending in check.
Using Credit Cards Responsibly
No matter how many credit cards you have, responsible use is an important part of financial health. And remember, having multiple cards means keeping up with multiple bills. Here are a few things to know about using credit cards responsibly.
Pay On Time
No matter how many credit cards you have, paying your bills on time, every time is vital if youâre working toward a good credit score.
You might want to set reminders on your phone or leave a note on your fridge to make sure you donât forget. Many credit card companies also offer email and text alerts you can opt in to. Or you can set up automatic payments so you never have to worry about forgetting to pay on time.
Pay More Than the Minimum Amount
Whenever you can, itâs a good idea to pay your balance in full every month. This can help you pay down your balance faster, minimize interest charges and avoid maxing out your card.
If you canât pay the full balance, itâs still a good idea to pay more than the minimum amount due if possible.
Keep Your Credit Utilization Ratio Low
Remember ? Well, the lower your credit utilization, the better your credit score might be. According to the CFPB, experts recommend keeping your credit utilization below 30% of your available credit.
Stick to a Budget
Monitor Your Credit
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How Many Credit Cards Should You Have
There is no magic number to that question because everyone’s situation is different. A strong argument can be made for having at least one credit card to take advantage of the inherent convenience, security and its other benefits. Justifying having more than one credit card can depend on whether you need the extra credit lines to accommodate your monthly discretionary budget or if you seek to leverage your everyday spending to earn various types of rewards like cash back, points or airline miles.
Are You Eligible For A Second Credit Card
- Your existing Lloyds Bank credit card cant be a Student or Classic account.
- You can only have one Rewards credit card at any time, but you can apply for a different card type.
- It must be at least 60 days since you applied for your first credit card with us.
- You can only have 2 Lloyds Bank credit cards, and up to 5 with Lloyds Banking Group, which also includes Halifax, Bank of Scotland and MBNA.
- Any credit agreement and borrowing amount is subject to an assessment of your personal circumstances.
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Redistributing Your Credit Limit
If youve got 2 MBNA credit cards, you can redistribute the credit limits between them. So, if you have credit available on one of your credit cards , you can move a proportion of it across to your other credit card.
You can redistribute your credit limit once every 6 months and you can move a minimum of £100 and up to a maximum of 90% of your available credit limit. There must also be an overall credit limit of £500 left on the original card.
- Redistributing your credit limit is different from a balance transfer – it simply means you can allocate your credit limit across 2 MBNA credit cards. It does not pay off any outstanding balance on either card.
- Redistributing is different from a credit limit increase – it wont increase the combined credit limit available to you.
You can only redistribute your credit limit by calling us on . Lines are open 8am-10pm Monday -Friday and 8am-6pm Saturday and Sunday. Standard network charges may apply.
Advantages Of Being A Multiple Credit Card Holder
The pros of having multiple cards include:
- Earn maximum rewards: Multiple credit card holders can earn maximum rewards on purchases. Some cards might give you rewards on gas while others offer cash back. If you travel often, having one card that offers miles and another that earns hotel rewards can give you access to additional, travel-specific perks like room upgrades and anniversary nights.
- Low credit utilization ratio: Having more than one credit card can boost your credit score by helping to lower your . Your credit utilization ratio is the amount of credit you’re using compared to the amount of credit available. Most lenders prefer to see it at 30 percent or lower.
- Backup cards: It can be very helpful to have more than one card if one of your cards is lost or stolen since it could take more than a day or two to receive a replacement card.
- Save with balance transfers: You could save money on interest by moving a credit card balance on a high-interest card to one with a lower rate.
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What If You Want To Have Less Cards
If you already have multiple cards and want to simplify your repayments and potentially save on interest, a balance transfer may suit you. This is where you can apply to transfer multiple balances onto one credit card, giving you a single monthly repayment and a period where you may not be charged any interest on your debt.