How many Credit Cards does an Individual Really Need?
Is it really necessary to have more than one credit card?
Canadian consumers might believe that they require more than one credit card. However, they are also concerned that having more than one may affect their credit score. It is a not true that if you already own more than one credit cards, card issuers will no longer allow you to get more card for the reason that they will consider you as a high-risk debtor. Keep in mind that if you pay off every statement regularly, on time, have a good debt-to-credit ratio and had never miss any payment, you will surely have an excellent credit score. This is particularly true if you have had all your credit cards for several years already. You have then proven that you are a responsible credit card holder.
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Having a good debt-to-credit ratio would mean that you are only using around 30% percent or less of your available credit. For instance, if you have a combined total of $10,000 of available credit and you have a balance on one card for $1,000. With that, you are just utilizing 10% of your available credit.
Problems sometimes take place when you have a lot of cards that you cannot manage them altogether, or you forget to pay off the balances. It can also be for the reason that you do not have sufficient salary to cover the payments even for just the minimum payments. In this case, it may be clever to merge all of your debts onto one card.
Another reason you consider to own only one credit card is if you are starting out with a new credit or you are aiming to rebuilding your credit after experiencing a bad financial history. With these cases, having only one card is what you need to begin to put together a credit. Newcomers should show that they are responsible and qualified to build a good credit history.
Here few good reasons why you should own multiple credit cards in your wallet:
1. Financial security. It is safe to keep an extra card that will help you in situations where your wallet is stolen, or if your primary card becomes underwent some fraudulent activities.
2. Rewards cards. You can collect points and trade them with free flights, merchandise or gift cards. Yet, the interest rates may be very high. Thus, you may utilize a different card for higher priced items.
3. Work expenses. You make use of a particular card for all your work expenses and purchases.
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If you plan to discontinue unused credit cards, it is essential to cancel only one card per year. Every time a card is cancelled, your credit score will be affected slightly. However, this will return to normal after several months of regular, prompt payments of your other credit card accounts.
For those people who are building new credit, start using only a single credit card, and establish an excellent credit history for yourself. If you already hold a strong credit history and are concerned if you still need all those cards, bear in mind that you have already proven yourself to be a responsible credit card holder.
See Also
Best Credit Cards Canada
Best Balance Transfer Credit Cards Canada
Best Cash Back Credit Cards Canada
Best Capital One Credit Cards Canada
Best MasterCard Credit Cards Canada
Best MBNA Credit Cards Canada
Best Visa Credit Cards Canada
Best Secured Credit Cards Canada
Travel Credit Cards Canada
External Links
Consumerbadcreditguide.com
Helium.com
Financialcrisis2009.org
