How many credit cards can I have?

When it comes to credit cards, it’s true there’s no right or wrong amount to keep in your wallet. But rather than asking how many cards you can have, perhaps the key questions should always be how do you plan to use that extra card, and can you cover the repayments when you do.

One of the benefits of having several cards is that they can be used for different purposes. For example, if you’re paying interest on an existing credit card, you could reduce the cost by transferring the outstanding balance to a new 0% balance transfer card.

By keeping several cards, using them responsibly, and paying off the balance on time every month, it gives banks and other lenders confidence that you can handle credit. Here are a few more of the positives:

• It can boost your credit score. You’ll receive a new credit limit for each credit card you open, which gives you access to a larger total credit limit. But it’s important to maintain the same level of spending that’s 30% of your total credit limit or lower, as utilising a small amount of your available credit can help improve your credit score. Of course, it’s also important to remember that making multiple applications for cards in a short space of time can also have the opposite effect on your credit score, so it always pays to think before you apply.
• You can earn maximum rewards. Using more than one card means you can earn more kinds of rewards. For example, one card may offer excellent rewards on dining, while another offers better rewards for travel or shopping.
• You’ll have extra funds on hand. With more than one card on hand, you’ll always have a back-up to help cover the cost of any sudden or unexpected expenses, like a car repair or a dentist’s bill for instance.

While there are some clear benefits to keeping several cards, there can be some potential pitfalls too. Here are a few to note:

• More risk of overspending. Having more cards at your disposal means access to more credit too. With that can come the temptation to over-spend. So it’s a good idea to build and follow a budget to help you spend only what you can afford to pay off each month.
• You could miss a payment. Managing multiple cards means having to make more monthly repayments, which can increase the chance of you forgetting one. If you accidentally miss a payment, you’ll be hit with a late fee which, depending on how long you take to make the payment, can be added to your credit report and affect your overall credit score.
• It can affect your credit score. Whenever you apply for a new credit card, the potential lender will run a hard check on your credit report, which takes points off your overall credit score. So, the more cards you apply for, the more points you can lose
• Harder to spot fraud. With more cards to keep a track of, it can be more difficult to spot fraud should it happen. So it’s important to be vigilant, and avoid keeping cards you never use or regularly check up on. Find out more about keeping your account safe

There are different types of credit cards, and each comes with its own benefits. So, before adding a card, it’s good to have a clear understanding of how it works, and why you need it. Comparing the types of credit cards below should help.

Balance Transfer Cards

You can reduce the amount of interest you’re paying on any existing credit cards by moving the balance to a single balance transfer card. That’s because balance transfer cards typically offer lower rates or 0% interest for a fixed period. Learn more about how a balance transfer card works.

Rewards Credit Cards

With a rewards credit card, you earn rewards every time you use it, most commonly, as cashback, points or frequent flyer miles (also known as air miles). So using this type of card can be a simple way to get a little something back on your everyday spending. Learn more about how a rewards credit card works.

0% Purchase Credit Cards

A 0% purchase credit card lets you buy things now, then pay off the amount you’ve spent over a fixed period of time, interest free. So this type of card can be useful for making bigger, more expensive purchases. Learn more about how a purchase credit card works.

Credit Building Credit Cards

Good as a starter credit card and for those wanting to build a better credit history. By making smaller purchases and paying off the balance each month, using this type of card can help improve your credit score.