You may be wondering how many credit cards is too many? This article outlines the ideal amount of credit cards that you should own alongside some basic facts about credit card ownership.
How Many Credit Cards Should I Have?
It is important to understand the following in relation to how many credit cards you should have:
- Having too many credit cards could have a negative impact on your credit score while having no credit history at all could also impact your score negatively.
- There is no specific right amount of credit cards to own. The amount of credit cards that you should have is dependent on your ability to make repayments, manage your balances and how choose to manage your finances overall.
- You should note that there are different types of credit cards and this offer distinctly unique services. You should consider the services provided by each card prior to making your decision on what type of credit card to choose.
- Keeping the same credit card for numerous years can actually improve your credit score so long as you are making repayments regularly.
Is It A Good Idea To Get Another Credit Card?
There is no right amount of credit credits to own. Whether you should get another credit card or not depends on your financial circumstances and how well you are able to manage your financial situation overall. Thus, there are numerous questions that you should consider prior to obtaining another credit card. These are as follows:
- What is the benefit of this card and do I need these benefits?
- Can I afford to add another monthly repayment to my existing outgoings?
- Am I concerned about the unsecured debt that I already have and how am I managing this?
Credit Cards & Credit Scores
Your credit score is assessed in order to determine your overall eligibility for loans, mortgages, and credit cards. The number of credit cards that you own will have an impact on your credit score and having numerous credit cards can pose an issue. Despite the fact that you may have only used a small amount of the limits that are available to you, lenders will take into account the overall total that can be borrowed if the cards are maxed out at the same time.
If this is an incredibly large sum, then lenders may be concerned that you will be unable to repay any debt that has accumulated. Conversely, having no credit cards at all can also be problematic as you will have no history to be able to be assessed. Having longer-term relationships with lenders proves that you are a responsible borrower that makes punctual repayments which inherently improves your credit score.
While having no credit cards does not necessarily damage your score, it does not help to build it in any way which can be problematic.
What is the Issue with Having Multiple Cards?
Theoretically, there is nothing wrong with you owning several credit cards so long as you continually make monthly repayments on them. If you keep up to date with your repayments then your credit score should remain consistent and healthy.
However, it is worth noting that the more cards you possess, the more likely you are to miss repayments and damage your score inherently. Having access to credit cards that have not been used can also concern future lenders. If you have direct access to thousands of pounds of credit but are choosing to apply for more credit, this may alert lenders who will be concerned about why you are applying for more credit.
What Is The Average Amount Of Credit Cards To Own?
It is common for most people to own more than a single credit card. While many people do not own a credit card, those who do own a card tend to own more than one at the same time. Whether you are in ownership of numerous credit cards or no cards at all is dependent on your personal financial circumstances and what you are spending your money on.
Some people will use different types of cards for different types of spending activities. For instance, someone who is self-employed may place their business expenses on a credit card and their personal expenses on another so that their records are far easier to manage overall.
What Type of Credit Card Should I Have?
You do not need to have any type of credit card in your wallet unless you want to. It is worth noting that many people get by without owning a credit card. However, they can be distinctly useful depending on your needs and requirements.
There are numerous different types of credit cards and each of these is designed to provide a specific service. You are unlikely to want more than one type of credit card at the same time. However, it is possible to own different types of cards. These different varieties of credit cards include the following:
1.0% Purchase Cards
These cards allow you to make purchases in most stores and online. You will be able to avoid paying any interest on your balances for between three months and two years. These cards technically allow you to borrow money for free for a short period of time. However, once this no-interest time period has passed, the debts that remain on the card will be charged at a high rate of interest (usually between 17-30%).
Thus, if you are not vigilant and careful about paying off your balance, your purchase card could end up costing you far more in the long run. Thus, it is not wise to have numerous purchase cards in your wallet due to the temptation to overspend during the 0% interest period.
0% Balance/Money Transfer Cards
You can transfer your existing credit card balance to this card in order to avoid paying interest on any debts for between three months and three years. However, there are transfer fees of approximately 3% of the total value of your overall balance.
Similar to 0% purchase cards, once this period expires, you are likely to incur high rates of interest. Thus, you should ensure that you have a plan of action in place to pay off these debts before then.
To conclude, there is no specific amount of credit cards that you should own at any one time. The number of credit cards that you own is dependent on your ability to make repayments regularly without any issues.