Key Considerations When You Have Multiple Credit Cards
When you have multiple credit cards in your wallet, or if you’re considering expanding your wallet to have more than just one credit card, there are a few things to take into consideration when it comes to how it can affect your credit health, debt management, and good habits.
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Multiple Credit Cards in the Market
According to the American Bankers Association, there are 323 million credit cards in the U.S., which averages to about 1.3 credit cards per adult.1 So, what should you be thinking about with numerous cards? Having more than one credit card and responsibly using them can be one of the key factors in a solid credit history and credit score, while poor management can lead to a less-than-stellar credit history and score.
Based on where you stand in your credit history, knowing which credit cards you should apply for is an important component of adding credit cards to your wallet. Which cards you are approved for is based largely on your credit history and credit score, among other factors that lenders evaluate. This means that if you are young and have a relatively thin credit file, your first credit card might be a student credit card.
Consider Your Credit Utilization Ratio
Credit rating agencies calculate your credit score in part based on a low credit utilization ratio, which measures the amount of credit being used in relation to the total credit available.2 If you have a small amount of debt and a large amount of your credit line left over, then your utilization ratio is generally considered to be low.
This concept applies to both one credit card or multiple, as your credit score will be calculated based on all of the credit cards in your name. This means that when you have two or three credit cards, those credit lines are added together, as is the amount you owe across all the cards. If you have two cards each with a credit line of $1,000 — for a total of $2,000 — and your debt across those two cards equals $500, you would have a credit utilization ratio of 25 percent. Generally, financial experts recommend maintaining a low ratio to more positively impact a credit score.3
With Multiple Lines of Credit, Pay Attention to Good Habits
As with just one credit card, when you have multiple cards, it’s important to pay attention to the following:
Pay on Time
A critical behavior is paying your credit card bills on-time, each month, by or before the due date.
Keep Track of Spending When Managing Multiple Cards
More cards mean more room for spending. There are several ways to keep track of how much you owe on each card, whether it’s through software, an app, or your credit card issuer’s spend tracking tools.
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