Is It Good to Have Multiple Credit Cards? It Depends, Here's Why

Posted on October 21, 2022

Credit cards hold an odd place in our culture, to find people credit cards are the normal way to buy things, and to others credit cards are an absolute emergency only way to buy anything and there’s merit to both perspectives. In this article however we’re going to explore whether you should use more than one credit card, is it a good good idea to use multiple credit cards? Bad? A mix of both? Read on to find out.

Benefits of Multiple Credit Cards

It’s best to start by explaining why you’d even consider using more than one credit card, and as it turns out there’s actually a few compelling reasons you might want to do so.

Organization: Having multiple credit cards can be useful for keeping your finances organized, having separate cards for different types of purchases, or in the event one of the cards is lost or stolen, you still have another card that can replace it if need be.

Increases your credit limit: Having multiple cards means you have a higher credit limit. Of course, you don’t want to be using your full limit on any of your cards. Taking responsibility for your spending is huge in rebuilding your credit score.

Some extra cushion is great to have in case of emergency.  Maybe your car breaks down and the repair isn’t under warranty.  Or your dog eats an entire tray of uncooked cannelloni off the countertop (definitely not speaking from experience on that one!) and he needs to go to the vet.  You’ll be grateful you have the credit available to take care of these unexpected expenses.

Decreased credit utilization ratio: Most importantly having multiple credit cards increases your “credit utilization ratio” , a record of how much credit you're using vs how much you gave access to, and also a key number in calculating your credit score. Essentially the bigger that ratio is, the better your credit score is. 

A good general rule is to use less than 35% of your available credit.  Hence the benefit of having multiple cards.  It’s easier to maintain a lower ratio when you have the ability to switch between two sources.

Debt-to-income ratio. Source: https://www.mortgagecalculator.org/calcs/debt-ratio.php

Different cards offer different rewards: This doesn’t help or hurt your credit score, but it is nice to get perks from your credit cards.  Some offer points that can be redeemed at the grocery store, or travel rewards that can be used for hotels or flights.  If you can get something back just by using your card to make purchases, why not?

All that being said, in order to benefit from having multiple credit facilities, you need to be responsible.  Make sure you don’t get in over your head with too many high-limit or high-interest cards that you can’t pay off.  Be mindful of your spending habits and keep up with your payments to make sure your credit score keeps improving.

Problems With Multiple Credit Cards

There are of course a few downsides that should be considered as well when you use more than one credit card. Credit cards need to be carefully maintained and balanced, else you quickly end up with a big pile of debt to deal with, and if you start paying off one credit card with another credit card, you're starting to get into big problems.

Credit cards also require regular use else they’ll become inactive, which means they no longer contribute to your credit utilization ratio and lower your credit score, to make sure that doesn’t happen you’ll need to make purchases with the cards you don’t use every so often.

Some credit cards have fees attached to them, which if you aren’t using the card for anything other than a boost to your credit score can feel like a waste of money.

So,  Is it a Good Idea?

The answer, like many things financial. Is “it depends”. There are situations where it can be quite beneficial to use more than one credit card and if you're especially good at staying on top of your finances then the downsides are easily mitigated.

If on the other hand your financial situation is highly volatile then multiple credit cards may only add to the mess and make things worse. Ultimately you need to figure out if it’s right for you based on your situation as you understand it.

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