How Many Credit Cards Is It Reasonable to Have?
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Consider Your Personal Finances
The Pros and Cons of Multiple Credit Cards
How to Know If You Have Too Many Credit Cards
It’s Hard to Keep Your Finances Organized
The Cost of Credit Card Fees Exceeds the Benefits
The Credit Card Company Tells You So
Different Cards for Different Purchases and Rewards
Credit Cards for Emergencies
Tips on Choosing Credit Cards
Consider fees: Because the cost of multiple cards can add up, look for low or no annual fee. Look for cards that complement each other: Instead of choosing multiple cards that offer similar benefits and rewards, one can optimize their returns by selecting cards with returns on different categories — and then being selective about which card to use on which purchases. Note the APR: For individuals who carry a balance, it’s a good idea to pay attention to the APR of various credit cards.
How Does Number of Credit Cards Impact Credit Score?
Added hard inquiries: Applying for a new credit card requires a “hard inquiry,” which can lower your score, typically for 12 months. Increased or decreased credit utilization: Credit scores also consider one’s credit utilization rate, which is the proportion of credit currently being utilized relative to an individual’s total available revolving credit. Depending on how they are used, multiple credit cards can impact an individual’s credit utilization in different ways: If you regularly pay off your balance on time, your credit utilization from this source will remain low, which can have a positive effect on credit score. If you carry a balance on several cards, that can add up and increase credit utilization, adversely affecting your score. Payment history: If having multiple cards and multiple monthly statements makes it difficult for a person to stay on top of credit card bills, they run the risk of late payments, which can further ding one’s credit score.
Credit Card Alternatives
Debit card: If you're struggling to get approved for a credit card or just want more boundaries on your spending, a debit card could be worth considering. Unlike a credit card, where you borrow money to pay for your purchases, with a debit card you use the money already in the attached bank account. Personal loan: In an emergency situation, a personal loan is another option to cover your costs. They could offer more competitive interest rates than some credit cards as well. Still, you'll need a hard inquiry to get approved and you're still borrowing money you'll have to pay back, plus interest. Payment apps: A payment app like Paypal is another way you can pay when shopping in stores or online as opposed to using a credit card. You can connect Paypal directly to your bank account or to a card. The service also offers the option to send money to other users. Still, it might not be accepted everywhere.
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