Advantages of Using More than One Credit Card
Why would you need or want more than one credit card? There are several important reasons.
• Deductible tax purchases can be kept separate and readily available
• Manage finances more efficiently
• Protect your internet purchases
• Build or repair a good credit history
How many is the right number?
There is no simple answer or one that fits all situations. However, the most important thing to remember is that no how many cards you use, you need to be managing them effectively. Knowing the details of each card is essential to handling a variety of cards, i.e. interest rates, outstanding balances, cash advance and balance transfer fees. The other key factor to consider is what number best allows you to maintain, repair or build a strong credit history. Cards that you may need for specific purposes include:
• Business expenses
• Household expenses
• Internet purchases
• Cards to increase credit limit vs debt ratio
Household expenses can be watched and managed by using one specific card for all those purchases; business expenses can be monitored and recorded by using another card solely for that purpose. In this way, you have an accurate record of how you are using your resources and can review and modify them to better meet your financial needs.
The hassle of tax season and verification of deductible purchases can be simplified by keeping business and household expenses separate. A special card can be used for your business expenses that offer perks that may be of benefit to you: cash rewards, expense reports for your business and higher credit limits.
If you’re reaching 50% or more of your credit limit on any one credit card, it is in your best interest to apply for another card. When the balance on your card reaches this point, the credit card companies frown upon your risk level. Lenders see higher levels of default issues when lenders max out their cards.
For your protection when buying from the internet, a separate credit card can be a Godsend. By having all of your web purchases on one card, you will immediately see any unauthorized discrepancies on the monthly statement. The actions that need to be taken to fix the problem card won’t interfere with your other financial obligations. One last thing to consider is to make sure you have at least one of the major credit cards, Visa; MasterCard; American Express or Discover. These are the most widely accepted credit cards available. Even if the interest rate is higher than your other cards, it is comforting to have credit available in case of emergencies.
One last thing to consider is to make sure you have at least one of the major credit cards, Visa; Mastercard; American Express or Discover. These are the most widely accepted credit cards available. Even if the interest rate is higher than your other cards, it is comforting to have credit available in case of emergencies.
Caution: Too Many Cards? Keeping track of each card and your spending are the most important concerns about having multiple cards. This can be a big deal, especially if you carry a balance. With multiple payment dates, it can become confusing and easier to be late in making your payments; or even worse, miss a payment entirely. By limiting the number of cards you use to two or three, you’ll be less likely to incur late fees and penalties.
Regarding your credit history, the number of cards you carry is of interest to the credit bureaus. Keeping up with payments on fewer cards that carry higher balances is considered positive credit behavior.
Likewise, having a bunch of cards with smaller balances sends the message to credit agencies of a potential risk of late or non-payment, if times get tough. For example, it is better to have one card with a $3,000 outstanding balance than 3 cards with $1,000 balance each.
The age of your credit accounts is an important factor in establishing your credit score. For this reason it is better to continue to use older cards at least once every six months rather than close them, especially if you are looking to repair or establish your credit history. Creditors value a lengthy and successful credit report!
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