Credit cards provide major benefits as they help you manage your finances. But a question exists – can I have multiple credit cards, and how many credit cards can I have?

How Many Credit Cards Can I Have?

You can hold multiple credit cards simultaneously, as there’s no limit on how many you can have. While having several credit cards can boost your purchasing power, it also has the potential to influence your credit score significantly.

Is It Good to Have Multiple Credit Cards?

Owning multiple credit cards can enhance your spending power and provide more chances to earn rewards like points, miles, or cash back. While the impact on your credit score is a valid concern, having multiple cards can benefit your score by helping you maintain a low credit utilisation ratio.

Advantages of Having Multiple Credit Cards

There are several advantages to having multiple credit cards, and you can benefit from them. Here are some of the most common benefits:

1. More Spending Capacity

   Owning multiple credit cards can greatly boost your financial flexibility. While each card has its credit limit, it’s wise to use only around 30% of your total available credit to keep your finances in good shape. This approach helps you manage your spending more effectively and allows you to make larger purchases when needed. By distributing your spending across different cards, you can avoid maxing out any one card, which can benefit your credit score.

2. Better Credit Score

   Maintaining multiple credit cards and paying all your bills on time can significantly enhance your credit score. With multiple credit cards, you can distribute your spending across them, which helps keep the credit utilisation ratio on each card below 30%. This approach not only demonstrates responsible financial management but also signals to lenders that you can handle credit wisely, ultimately contributing to a stronger credit profile.

3. Added Offers and Rewards

   Credit cards come with various perks like rewards, cashback, deals, and discounts. The more cards you hold, the more opportunities you have to maximise these benefits. By strategically using these cards, you can enjoy significant savings on everything from everyday purchases to big-ticket items like electronics or travel bookings. Whether it's earning points towards future discounts, receiving cashback on purchases, or accessing exclusive deals, a well-curated selection of credit cards can make your spending work harder for you. Just be sure to manage your cards responsibly to avoid overspending and to fully reap these financial rewards.

Disadvantages of Having Multiple Credit Cards

While there are several advantages to having multiple credit cards, there are also some disadvantages to it. These include:

1. Possible Debt Trap

   Having multiple credit cards can easily become a double-edged sword. While the array of rewards and benefits might seem enticing, it also comes with the risk of falling into a debt trap. Each card brings its credit limit and minimum payment requirements, which can lead to accumulating debt if not managed diligently. Balancing multiple cards often means juggling various due dates and interest rates, increasing the chances of missed payments or overspending. Additionally, the temptation to use available credit irresponsibly can result in higher balances and growing debt.

2. High Overall Charges

   Multiple credit cards can lead to various fees that add up over time. Each card may come with its own set of costs, including a joining fee charged when you first open the account. On top of this, many credit cards have annual fees that recur each year, regardless of whether you use the card frequently. Additionally, transaction charges might apply for certain types of purchases, particularly international transactions or cash advances. Even if you avoid these specific charges, some cards impose fees for late payments or exceeding your credit limit. All these expenses can accumulate, potentially outweighing the benefits of having multiple cards. It’s important to review the fee structures of each card carefully and weigh them against the benefits you receive to ensure that the overall cost is justified.

The Impact of Having Multiple Credit Cards on Your Credit Score

Holding a large number of credit cards might make you appear risky to lenders and could negatively impact your credit score. Even if you’ve managed to pay off all your balances, having numerous open credit lines can still make you seem like a potential risk to new lenders. There isn’t a definitive limit to how many cards are too many, but it’s wise to only keep the cards you truly need. Consider your credit score, your ability to manage balances, and your goals for rewards when deciding which cards to apply for and keep.

How to Manage Multiple Credit Cards

As seen above, one of the main disadvantages of having multiple credit cards is that it impacts your credit score, and a damaged credit score can further pose challenges in getting loans. Hence, it’s important to effectively manage multiple credit cards

• When you have multiple credit cards, aim to maintain a low credit utilisation ratio and ensure you are paying your credit card bills.
• Set reminders to pay your bills on time. You can even automate the billing process to never miss a payment.
• Keep checking your monthly credit card statements to monitor your spending. This way, you can avoid overspending and always stay within your budget.
• When making a transaction through your credit card, you are provided with an SMS alert. Take advantage of this service and keep track of your available credit limit so you don’t exceed the spending limit.
• Ensure you familiarise yourself with all the rewards and offers your credit cards provide. This will help you maximise the benefits of all your credit cards.