In today’s world, people rely more on credit cards for their transactions rather than liquid cash.Many people possess multiple credit cards to maximize the benefits from the cards. WE are exposed to glitzy tempting advertisements encouraging us to own just one more credit card. But how many credit cards can you have before you end up in a permanent debt cycle? mymoneykarma shares the positives and negatives of having multiple cards, so that you can make a decision based on what works best for you.
Do Multiple Credit Cards Help?
Pros of multiple cards:
These days, most cards have rewards points as a common benefit, targeted at some specific purchases. Based on what type and kind of card you hold, if you make a purchase, you can receive reward points or cash backs. Most cards have a limit to points earned during a cycle. Having a second card can help you maximize your points as you spend. mymoneykarma can help you track your expenses automatically on each card and maximize your reward point accumulation.
In the event when your card is damaged or lost, it takes 7 to 9 working days to get your card back and running. A second card can come in handy and can act as a backup for all your financial transactions.
A big advantage of having a second card is that it helps you to build your credit score by minimizing your credit utilization ratio on a particular card. The lesser credit utilized, the more likely you are not going to default on your payments, keeping your credit rating on track.
Cons of multiple cards:
Holding multiple cards comes with its own share of burdens. Managing them and tracking payment due dates and purchases can be a tough task. Missing a payment means increasing interest on the balance amount, thus impacting your credit score. However, this risk can be mitigated using the automated bill payment trackers provided by mymoneykarma that keep a track of all your credit card dues dates and remind you in time to pay those
Also, do remember to have a minimum of six months as a cooling off period before applying for a new card, home loan, or an auto loan. Taking on new credit facilities during the cool-off period might not be the best thing to do. Please plan your credit usage cautiously so as to not encounter difficulties in getting new lines of credit.
If you own multiple credit cards, then you may end up spending more than what you are capable of repaying, leading to forced debt. This is one of the most serious downsides of owning multiple credit cards. Ideally, if you have more than one card, there should not be any problem provided that you are able to manage, track and maintain that card without getting into a debt trap. A debt trap not only ruins your credit score, but also forces you to spend your hard-earned money on paying unnecessary interest and fees. This can be avoided by using mymoneykarma to track your expenses and set budget reminders that will alert you when you are about to exceed your limit.
Multiple credit cards can be a great way to optimize your spending without giving up a lot of luxuries provided you have an efficient system of tracking due payment dates and paying credit card dues before deadlines.