Credit cards are a popular way to pay for things without using cash. Some people open just one credit card, while others might have several. But is having more than one credit card a smart move? Let’s take a look at the pros and cons of having multiple credit cards so you can decide what makes sense for your financial needs.
Having more than one credit card can offer some great benefits—if you use them wisely. Here are a few reasons why people choose to have multiple cards:
While there are many benefits to having multiple credit cards, there are also some potential downsides. These include:
Advantages of Having Multiple Credit Cards
Having more than one credit card can offer some great benefits—if you use them wisely. Here are a few reasons why people choose to have multiple cards:
- Lower Credit Utilization. Credit utilization is the amount of credit you’re using compared to your total credit limit. Experts recommend keeping the credit utilization on each of your cards below 30%. When you spread your purchases across multiple credit cards, you’re less likely to overutilize them. When your cards stay well under your credit limit, it can have a positive impact on your credit score.
- Better Rewards. Credit cards can offer a variety of reward options. Some give you cash back, others offer travel points for hotels and flights, and some give discounts at certain stores you shop at most. Having more than one credit card allows you to pick the best card for each purchase, so you can maximize your rewards.
- Backup Options. If one of your credit cards is lost, stolen, or declined, having another card in your wallet means you’re not stuck. It’s always good to have a backup, especially in emergencies or while traveling.
- Special Perks. Some credit cards come with useful benefits like free travel insurance, extended warranties on purchases, or access to airport lounges. Having a few different cards could mean more perks and benefits that fit your lifestyle.
- Faster Credit Building. Using multiple credit cards responsibly—paying them on time and keeping your credit balances low—can help you build credit. A good credit history and strong credit score can make it easier to qualify for loans when you need them, and can help you get the best interest rates available.
Drawbacks of Having Multiple Credit Cards
While there are many benefits to having multiple credit cards, there are also some potential downsides. These include:
- Overspending Risk. More credit cards usually means more available credit. That can make it tempting to spend more than you should, especially on things you don’t really need. It’s easy to forget that credit isn’t free money and you have to pay back what you spend.
- Debt Accumulation. If you spend too much, it can be hard to pay off your balances in full each month. Carrying a balance means you’ll start paying interest, and those charges can add up fast. The more debt you have, the Organizational Challenges. Managing multiple cards means juggling different due dates, balances, and interest rates. It’s easy to lose track, which increases the risk of missed payments.
- Fees and Costs. Some credit cards charge annual fees, and most have late payment penalties and high interest rates. The more cards you have, the more those costs can add up, especially if you’re not staying organized.
- Negative Credit Impact. Opening too many credit cards in a short time can lower your credit score. Each time you apply for a new card, it creates a “hard inquiry” on your credit report, which can drop your score by a few points. Missed payments or high balances across several cards can also hurt your credit health.