Credit Cards

Is it okay to have multiple credit cards? This is what Ramit Sethi says

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Here are some tips worth contemplating.

Key points

  • Having multiple credit cards could open the door to debt and make your bills more difficult to manage.
  • It can be okay to have more than one credit card, but only under the right circumstances.

Some people have a single credit card with which they make all their purchases. Other consumers have multiple credit cards and rotate between them to maximize cash back and reward points.

Neither approach is right or wrong. The advantage of having a single credit card is that it will be easier to track your spending and manage your bills. And if that card offers a great rewards program, then it may be more than enough.

Meanwhile, the advantage of having several credit cards is to take advantage of different advantages. And if you can juggle your various bills and their different due dates, having multiple cards might also give you more flexibility.

But while some consumers may benefit from having multiple credit cards, financial expert Ramit Sethi says some people should stick to a single card. This is when that advice could apply to you.

Where are you on your credit-building journey?

When you’re new to the workforce or trying to recover from a financial setback, you may be at a stage where you’re trying to build your credit. And if that’s the case, Sethi says it’s better to have just one credit card.

But once your credit score has improved and you’re in a good financial spot, Sethi says you should feel comfortable expanding to two or three credit cards. And there are benefits to going down this road.

First, having multiple credit cards could mean getting hooked on a higher total spending limit. And as long as you keep your fees modest, a higher spending limit could help your credit score improve or stay strong by helping your credit utilization ratio stay low.

In addition, having several credit cards allows you to take advantage of different advantages. You may have a credit card that offers the best cash back on groceries and another that is better on gas. Regular use of both could make a lot of sense, as doing so could increase the amount of cash back you’re receiving.

It might also pay to add a travel rewards credit card to your rotation. These cards often come with money-saving perks like discounted onboard purchases and free checked bags.

What is the correct call?

Sethi is pretty clear that if your credit needs to work, it’s best to stick to a single credit card. From there, you have options. But ultimately, you have to do what works best for you. You may prefer to keep your financial life simple and stick to a single credit card. If you do, you might miss out on some benefits, but if that’s what feels best for you, go for it.

Remember, the more credit cards you have, the more tempted you may be to make purchases you can’t pay in full. And having more than one card means having to pay more than one bill each month. If juggling multiple credit cards sounds too tempting or seems like too much of a chore, stick with one card with a great rewards program and don’t worry about the benefits you may be missing out on.

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