Should you have multiple credit cards

Should you have multiple credit cardsIn this fast world were people have less time and more things to look at, it is natural that they would rely more on plastic money than carrying liquid cash. In the ideal world, we would need one or two cards to meet our needs of plastic money. However, as we are exposed to a world of sales calls, emails and SMS’s from banks trying to sell us a credit card we might end up taking more than one credit card. We at mymoneykarma want to share the unbiased perspective of positives and negatives of having multiple cards so that you can make a decision of what works best for you.

Does holding multiple credit card really helps you?

  1. Positives of Holding multiple cards:

    Most card these days have rewards points as a common benefit and these are targeted to some specific purchases. Basis what type and kind of card you hold if you make a purchase, you many ends up with some goodies like reward points or cash backs. Like for example a shopping card when used at shopping outlets or merchandise will give you more benefits than using the same for your fuel.As most cards have a limit to points earned during a cycle, hence having a second card is this case can help you to maximize your points as you spend. This, however, is not easy to track manually, however, using you can track your spends automatically on each card and plan to maximize your reward point accumulation.

    In the event that your card is damaged or lost, it takes an average 7 to 9 working days to get your card back. This is another reason to hold a second card as that can come in handy and can act as backup for all your financial transactions.

    One of the biggest advantage and benefits of having a second card is it helps you to build your credit score by minimising your credit utilization ratio on a particular card. This is nothing but the ratio of the debt to the limit you hold on that card. The lesser the credit utilized the more likely you are going to default to make payments which directly keep your credit rating on track

  2. Negatives of holding multiple cards:

    Holding multiple cards comes with its own share of the burden. Managing them, looking after their due dates and tracking purchases can be a pain if not done the right way. Missing a payment means putting more money on late payments and that also hits your credit score. However, this risk can be mitigated using the automated bill payment trackers provided by 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 period before applying for a new card, home loan or an auto loan. Therefore taking on new credit facilities when you are planning to buy a house or car might not be the best thing to do. Please plan you credit off take so as to not encounter difficulties during approvals.

    If you carry more cards then you may end of spending more than what you are capable of repaying which generally leads to forced debt. This is one of the most serious downsides of having multiple credit cards. Ideally speaking if you are holding more than one card, there should not be any problem provided 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 hards earned money on paying interest and fees. This can be avoided using as you can track your spends and set budgets that will alert you when are about to breach them.

    Now that you know both the pros and cons of having multiple credit cards. Please use this information to decide what is best for you and your financial habits.

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