The right number
of cards depends on you... Why would you
need or want more than one credit card? Here are several benefits to consider:
- Learn to budget money more efficiently
- Keep tax deductible purchases separate
and easily accessible
- Build or improve
your credit history
- Gain extra perks and
credit card rewards
The Right Number What's
the right number of credit cards for you? This is based soley upon your personal
needs and objectives. One credit card is sufficient for many people. And 2-3 credit
cards will suffice for most - without being excessive. But before you start applying
for additional offers, here are two very important factors to consider:
| Effective Management:
No matter how many cards you use, you need to manage them effectively. To do this,
make sure you know the details of each card (i.e. APR's, outstanding balances,
cash advance and balance transfer fees, etc). Make sure you're able to pay off
at least the minimum monthly payment for each card on time! Credit
History: Another factor to consider is how many credit cards will best allow
you to maintain, repair or build a strong credit history - and ultimately raise
your credit score. Too many credit cards might actually have a negative impact
on your credit rating! But too little credit, and you'll never be able to get
a mortgage or auto loan.
| Benefits
of Using More than One Card - Manage
Household Expenses: Keep one card for your family and household purchases
and another card for business expenses. This way, you can easily monitor how you're
using your resources and review / modify them to better meet your financial needs.
- Benefit from Reward Cards:
Use a low APR credit card for long-term charges, and a reward
credit card for short-term charges. This way, you'll save money when you carry
a balance-- but you'll earn bonuses when you payoff your new purchases quickly.
- Simplify Your Taxes: By keeping
your business and household expenses separate, you can simplify the hassles of
tax season. Many credit card companies send out quarterly or year-end summaries
showing all your purchases by category, ie: retail, dining, travel, etc. which
will assist you in seperating all your taxable expenses.
- Keeping
within Limits: If you're reaching 50% or more of your credit limit on any
one credit card, it is in your best interest to apply for another card. When the
balance on your card reaches this point, the credit card companies frown upon
your risk level. Lenders see higher levels of default issues when lenders max
out their cards.
- World Wide
Web Purchases: Protect yourself by making all your online purchases with one
credit card. By having all of your web purchases on one card, you'll immediately
see any unauthorized discrepancies on the monthly statement. The actions that
need to be taken to fix the problem won't interfere with your other financial
obligations.
Caution: Too Many Cards?
Keeping track of your cards and controlling
your spending are the biggest concerns when using multiple cards. This can be
a big deal, especially if you carry a balance. With multiple payment dates, it
may become confusing - making it easier to be late; or even worse, missing a payment
entirely. By limiting the number of cards you use, you'll be less likely to incur
late fees and other penalties. How the
Number Affects Your History The number
of credit cards you carry can have an effect on your credit score. Keeping up
with payments on fewer cards that carry higher balances is considered positive
credit behavior. Likewise, having too many credit cards with smaller balances
implies you are a potential risk of late or non-payment. For example, it's better
to have one credit card with a $3,000 outstanding balance than 3 credit cards
with a $1,000 balance on each. The age of
your credit card accounts is another important factor in establishing your credit
score. Because of this, it's better to continue to use older credit cards at least
once every six months rather than closing them - especially if you're looking
to repair or establish your credit history. Creditors value longer relationships
and your credit score will show this...
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