The Benefits and Drawbacks of Carrying Multiple Credit Cards

Credit cards are a staple in the American wallet. The average adult has at least two bank-issued accounts according to Experian’s 2016 State of Credit report. Consumer credit plays a key role in overall financial health, and the stakes are high. When used wisely, credit can strengthen your stance in the credit score range and help you secure loans with the best interest rates. On the other hand, bad credit often leads to higher interest rates and could even disqualify you from the lending process.

So, how many credit cards are too many? How will multiple accounts affect your score? The answer to these questions often comes down to personal habits and goals, and there are several pros and cons to consider.

Benefits of Multiple Credit Cards

If you’re an experienced and responsible credit user, the benefits of maintaining more than one card could outweigh the risks.

Earning Maximum Rewards

Credit card issuers offer a variety of perks for cardholders. Using multiple cards allows you to strategize and earn for every dollar you spend. For example, suppose you are a frequent flyer who is also interested in funding your child’s education. Card A is tailored to suit travel-related rewards, while Card B’s sole focus is college savings. Take advantage of multiple benefits by considering your most frequent expenditures and choosing credit cards that align with your goals.

Safety in Case One Card Is Compromised

Credit card issuers are cracking down on identity theft, but chip technology still isn’t perfect. In fact, a 2016 Gallup poll found that 27% of Americans were victims of credit card information theft, up from 22% the previous year. If your credit information is compromised, your issuer will probably send you a new card and instruct you to shred the old one. If this occurs, it’s useful to have a second option for emergencies.

Drawbacks of Multiple Credit Cards

While there are potential benefits of maintaining multiple credit cards, there are a few drawbacks worth considering.

Losing Track of Spending 

The case for fewer credit cards often comes down to simple math: Fewer credit cards means fewer chances to overspend. If you struggle with budgeting, it can be difficult to curb spending with a high credit limit. You also run the risk of digging yourself into a hole of debt that’s difficult to escape. A 2016 study found that the average credit balance for U.S. households is $16,748, a hefty sum that will only increase with a high variable interest rate attached.

Forgetting to Pay a Bill

You aren’t alone if forgetfulness is a vice. A study conducted by Fiserv, a financial services provider, revealed that 35% of consumers paid at least one bill late in the past 12 months, and 65% also paid a late fee. If your life is chaotic or your memory is lacking, the last thing you need is multiple account balances to keep track of. While it’s possible to create reminders for yourself with budgeting apps, the potential credit damage caused by late payments, fees and accruing interest may not be worth the trouble.

While there is no ideal number of credit cards to keep in your wallet, learning how your credit score is calculated can help you use them wisely. Bolster your FICO score by creating deliberate spending habits and credit usage along the way.

If your credit has been impacted negatively, learn about credit repair services here.

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