Multiple Credit Cards or One – Which One Is Right For You?
Credit cards are omnipresent in every wallet today and it won’t be overstretching to remark that the contemporary transaction scene is largely governed by plastic ease. With due regard to the fact that these cards have made shopping more convenient and relieve you from carrying large cash, it can’t be denied that impulsive shopping through credit cards has also led to high credit card debts for many. Now, it’s definitely not possible to imagine your wallet without your credit card; but the question is how many should you have? Theoretically, it might appear safer to proceed with just one single card, yet, when you consider a lot of associated factors, one single credit card does not seem really practical.
The post below explains why you should not stick to one credit card, followed by a brief on how many cards would be actually reasonable for you.
Why you should not have just a single credit card?
It might damage the credit score
Every credit card user must be aware of the term “credit utilization ratio,” which implies how much of the available credit you are actually using. The experts suggest keeping the percentage within 10-30% or maximum 50% and the bigger the percentage here, the lower your credit score would be. Now, let’s say you usually maintain a low credit utilization, which means a good credit score, but what if suddenly, you need to use a bigger amount of credit for a certain unavoidable emergency? Such situations would definitely spike up the utilization ratio, affecting the credit score in an instant.
However, if you have multiple cards, you can easily distribute the huge expense between the different cards, which in turn would relieve the sudden pressure on one card, and would also help you to maintain a balanced utilization ratio with all the cards.
A single credit card leaves you with no backup when your card is compromised somehow. The bank might close the card or it might get stolen- and in such situations, it’s really handy to have other credit card options.
Different cards offer different benefits
Moreover, different credit cards offer different benefits and multiple cards will enable you to take advantage of several offers. For example, one card might offer you 5 percent cash back on flight tickets while another one might extend a decent 2 percent cash back on every purchase.
Now, the question is how many cards should you have? Well, as per the financial pundits, you should count on two credit cards at least. One would be for everyday purchase and another one would be strictly for emergency purposes, say a medical emergency. This way, you can have your necessary backup and the second credit card will also help you to balance your credit utilization ratio in case you encounter a sizeable expense out of the blue. If you have your own business, you must consider a separate set of cards for it.
However, credit card debts are not uncommon. In case you unfortunately find yourself in a similar situation, seek the help of credit consolidation loans to get rid of the situation as fast as possible.
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