The highest number of credit cards owned by a single individual is 1,562!!!! While well above the average of 3.6 credit cards per household, it leaves you wondering what is the advantage of carrying multiple credit cards.
Pros and Cons of Having Multiple Credit Cards
Credit cards can be a valuable financial tool when used with discipline. Some of the benefits include:
Reward Opportunities
Credit card rewards are a significant advantage to using credit cards. It’s also the primary reason people carry more than one credit card. I personally carry a Chase Disney card because my family travels to Disney World once a year, and this credit card has some really great rewards perks, which reduce my vacation expenses.Â
You may prefer some other form of rewards such as airline points, hotel loyalty points, or cash back. Whatever your preference, there is sure to be a credit card to provide a valuable reward for it.
Financial Cushion
General personal finance guidance says you should have three to six months saved in an emergency fund. Some prefer to maintain a higher bank balance while others prefer to have a line of credit with their bank. As a third option, some choose to have it available through their max limit on a credit card.
While the latter isn’t advisable as the sole source of an emergency fund, it can act as a placeholder until you have the cash available.
Improve Credit Score
Your credit score is a mixture of a variety of metrics and calculations. One of those metrics is a credit utilization score which measures how much of your credit limit you’ve used. The more cards you have, the higher your credit limit. If you don’t carry over your balance each month (said another way, you don’t carry any debt), your credit utilization score will be high.
Like all good things, using a credit card includes certain risks. Those risks increase the more credit cards you hold. Here are a few:
Difficult to manage
The higher the number of credit cards you have, the more difficult they will be to manage. Consider varying due dates, interest rates, and balance. Plus, you’ll need to review your statements to ensure there are no fraudulent charges or errors.
The more cards you have to manage, the more likely it is you will overlook a mistake on your statement, and miss a payment.
Overextended credit
If you are not self-disciplined with your finances, multiple credit cards are not recommended. I would be so bold to say a single credit card is a definite no. The likelihood that you will max out one card, then another, then another is very high in this situation.
With multiple credit cards, you’ll need to be cautious of the balances you are carrying. Particularly if it’s in the vein of increased rewards value.
High fees and increased interest
Credit cards generally come with an annual fee. The better the card (i.e., the better the reward system), the higher the fee. If you are carrying multiple cards to reap the rewards, make sure the annual fee is worth it each year.