Should you have more than one credit card?

With nearly 60 million credit cards floating around the UK, it’s fair to say plenty of us are using multiple credit cards at once.

But how many is too many?

If you’re wondering about opening another account, consider the pros and cons before you make a move.

Lower your credit utilisation

Multiple credit cards, if used correctly, are great for your credit score. This is because of a feature called credit utilisation and how credit providers perceive it.

Credit utilisation is, in short, the percentage of credit you are using against your credit limit. For example, if you had a monthly credit limit of £1,000 and were using £800 a month, your utilisation would be 80%. £500 would be 50%, £200 would be 20%, and so on.

Where your provider is concerned, high utilisation is bad news and will affect your credit score negatively. Providers like to see utilisation of no more than 30% so, if you are close to your credit limit on one card (indeed anything above 30%), it benefits you and your credit score to spread the debt across several cards.

Spread the spend

Speaking of spreading your debt, the same process is beneficial to those struggling with a lot of debt on one card or looking to spread out a purchase cost (and avoid high utilisation).

Where high interest debt is concerned, you can use multiple cards to transfer a balance from a high interest account to a new, 0% interest card or two in order to release the pressure on an account building interest. It’s a temporary solution but saves you money in the long run.

Back yourself up

If credit cards are your main source of payment, it’s worth having multiple cards so one can be used as a backup or for emergency use.

This is useful if your card provider freezes your main card, for example if it suspects fraudulent use, or an unexpected payment comes up that needs dealing with immediately.

Reap the rewards

Credit cards offer various incentives to spend, and different credit cards offer different perks. An example would be a percentage cashback amount on certain purchases across the month.

Using different cards on the right purchases means you’re getting the most back from your spending.

Don’t lose track

The big risk with multiple cards is that they can, if mismanaged, rack up debt and harm your credit score.

The more cards you have, the easier it is to lose track of both spending and repayments. Purchase frivolously and you may spend more money than you have. Meanwhile, missing repayments can mean interest and a hit on your credit score.

The combination of the two is a vicious and very damaging cycle you don’t want to find yourself in.

Unwanted extras

Whilst you’ll no doubt be looking for the best interest deals and lowest charges, introductory offers do come to an end and many cards come with an attached monthly fee.

If you’re running a handful of cards, such fees and interest can add up, leaving you with unwanted costs at the end of the month.

Fraud risk

Just as it’s easy to lose track of your spending and repayments, it’s also harder to notice possible theft or fraud across multiple accounts if you’re not paying too much attention.

An unlikely occurrence, but another thing you need to be on top of.

So, how many cards?

The answer is no one really knows!

It depends on your current situation with outstanding debt and your future plans. More than anything your ability to responsibly manage your finances will be the determining factor in selecting the right number of credit cards for you.