It's not a novel incident to juggle multiple credit cards, given that there are many out there with different benefits. For many, it's a tool to increase purchasing power, earn rewards or establish a strong credit profile. But when mishandled, it can just as easily bruise your credit score and turn into financial trouble.
What Matters When It Comes to Your Credit Score
Before getting into whether or not having more cards is good or bad, it's essential to know what impacts your credit score:
Payment history: Paying bills on time is the most critical element. Just one missed payment can damage your score
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Credit utilisation: This is the amount of available credit being used. Less use is usually better, and their metrics score higher
Credit age: Older credit accounts generally benefit your score, because they reflect long-term reliability
Credit mix: Having a mix of credit types, including credit cards, loans, and mortgages, indicates that you can manage various types of debt
New credit inquiries: Applying for too many new accounts in a short time frame can raise red flags and hurt your score
The Perks of Having Multiple Cards
If you use multiple credit cards smartly, you can get an edge:
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Lower credit utilisation: An overall higher credit limit maintains a lower usage ratio as long as spending is kept in check
Rewards maximisation: Different cards have different benefits. It can help maximise points or provide cashback. You can allocate certain cards for travel, groceries or fuel
Improved credit mix: Having credit cards on top of certain loans can improve the mix in your credit portfolio
The Downside You Can't Ignore
But so too are the risks, which are as significant as the benefits:
Missed payments: The more cards you have, the easier it is to fall behind. And even one missed payment can leave a lasting scar
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Overspending: Many cards mean loose pockets, leading to growing debt and escalating rates
Frequent credit checks: If lenders see several applications for cards appearing on your record at the same time, it could signal financial distress and have a negative effect on your score via hard inquiries
Reduced credit age: When you open new accounts, it lowers the average age of your credit history, which can pull your score down
How to Manage Multiple Cards Without Harm
Automation of payments: Set automatic payments so that you do not miss due dates
Track the usage: This can be done by creating a spreadsheet or via a budget app to keep track of expenses and other details
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Be picky: Only apply when there's a clear benefit or need, not just for impulse shopping
Having multiple credit cards isn't inherently good or bad. It all depends on how you deploy them. Responsible management, paying on time, spending wisely and keeping new applications to a minimum can help your financial profile. Miscalculations, though, can result in a lower score and lots of long-term debt. Make sure that before you add another card to your wallet, it's a calculated decision, not just one of convenience.
