When it comes to credit cards, people can get a little confused. Some people believe that you should really only have the one whilst there are other people who have a number of credit cards. So, which is right? Should you have more than one credit card? Here we take a look at the benefits, and the risks, of having more than one credit card.
The benefits
Some people use different credit cards for different things and this can actually be a very useful way of managing your money. A credit card with a standard rate can be used for day to day purchases, these are the things you need such as food and fuel and this is always paid off at the end of the month. Then they may have a credit card with a 0% interest rate, this can be very useful for larger purchases allowing you to spread the cost over time.
Having several credit cards can actually help you to improve your credit score. This is, of course, as long as you make the required payments every month – this helps to build up a picture of you as a responsible borrower and will help to boost your credit score.
The risks
The big risk associated with having too many credit cards is of course the temptation, whether deliberate or through bad planning, to overspend. This can leave you with large amounts of money owed over a number of credit cards. Paying this off can leave you in a difficult position, only being able to pay the minimum amount off on each card each month will take you a long time to pay the full amount off; missing a payment on any of the cards will have a negative effect on your credit rating and that could affect you in the future.
If you have multiple credit cards then this may make you an easy target, you are less likely to notice if one of your cards has gone missing and by the time you do realise someone could have unfortunately racked up a large amount of spending on it.
If you have multiple credit cards but do not use some of them very often then you may actually be spending out on annual fees and charges which could be costing you money you cant really afford to lose.
