There are plenty of tales of people who have enjoyed amazing rewards from having multiple credit cards and juggling balances at exactly the right time. From enough air miles to pay for a honeymoon, to cashback to cover the weekly shop, there are many incentives to apply for more than one card. But does this approach really offer the benefits it promises – and what are the associated risks?
The Pros Of Having Multiple Credit Cards
Plenty of options – If you have numerous cards then you’re not going to be as badly affected if you lose one, or if a fraudulent transaction results in a frozen account. If you just have the one card then you completely lose access to all credit until any issue is resolved.
The rewards are bountiful – If you find the right cards, and you pay off your balances before interest is applied, you can earn rewards from multiple credit cards. You could accumulate points for shopping vouchers, cover travel costs, enjoy free entertainment and food – the list is endless.
Polish up your credit score – If you maintain each credit card with precision, regularly make the right payments and stay on top of the balances then you’re demonstrating you’re a great borrower. So with multiple cards, especially if they’re not all brand new, your credit score could stay pretty healthy or even improve.
0% on everything – having multiple cards can help you to avoid paying any interest at all for your credit, which surely has to be the Holy Grail. The right card used at the right time can ensure you never pay interest on anything you buy with the card, or on any balances that you transfer (although watch out for those pesky balance transfer fees). But the wrong credit card used at the wrong time is another matter…
The Cons Of Having Multiple Credit Cards
It’s very easy to get into trouble – most of us have pretty busy lives and probably don’t have a lot of time to sit and monitor accounts and balances. Unexpected financial payments, a couple of months forgetting to clear balances and a few shopping splurges and suddenly you’re up to all the limits on all the cards. The more cards you have, the more risk there is of building up serious levels of debt that you can’t pay off easily.
Fraud can strike – if you have several cards then it is harder to keep on top of all the payments going through them so your risk of experiencing fraud – or, more accurately, not spotting it quickly – goes up significantly.
Credit score issues – if you have numerous credit cards then this can affect your credit score negatively. If they’re all new cards – or it’s clear that you’re opening a new account every time you hit a financial stumbling block – this isn’t going to reflect well on your credit history. Applying for multiple cards across a relatively long period of time and maintaining them properly can be an asset to your score; but several applications in quick succession and low credit limits will highlight you as a risk to a lender.
As with so many things in life, how you handle a particular situation can have benefits and drawbacks. If you are sure you could manage multiple cards they can certainly offer financial rewards but there will always be a risk – only you know if it’s one worth taking.