As a study conducted by Stats Canada shows, it is estimated that on average each Canadian possesses three credit cards. There are merits and demerits of having more than one credit card, but there is a fine line between being able to manage them responsibly and potentially damaging your credit score. If you’re about to increase or decrease the amount of credit cards that you own, here are some things that you should consider:
Using various credit accounts can provide freedom and flexibility when it comes to paying off debt and spending within your credit limits. If one of your cards gets lost or stolen, it’s a good idea to carry a backup in case of an emergency. In addition to this, the abundance of different features that credit cards come with today might mean that you use one strictly for cash back, and another for travel points or for other product warranties.
It is easy to mount up debt when you’re using multiple cards. Whether you’re dealing with one or several, the most important thing to consider is how responsible you are at repaying your total balance. Missing due dates could lead to costly late fees, increased interest rates, and affect your credit score.
Although paying your fees monthly can put you in financial hardship when you have more than one line of credit, it’s important to prevent unmanageable debt. If you do have multiple credit cards, a great tip is to spread your borrowed money evenly across each account. If you’re actively using all of your accounts and ensuring that they’re paid off monthly, the percentage of your debt will be low and your credit score will be protected.
Although it only takes one card to build up a credit score, owning various cards is a great way to show lenders that you’re capable of managing multiple accounts. If you’re well established at dealing with a wide variety of loans, from credit cards to a mortgage, issuers will be more likely to approve you for future investments. As well, trustworthiness looks great on a credit report.
Having numerous credit cards can help you maximize rewards, maintain flexibility and diversify your credit profile. However, keeping track of your spending is important to prevent financial damage from occurring. Before you decide to cancel or apply for a credit card, it’s essential to research every variable that could affect your credit score. This will ensure that you know which options will align with your spending habits.
Visit Canada Auto Experts if you are looking to build your credit the fastest way, i.e., with a car loan. Or call 1-855-550-5565 to talk to a credit specialist today!