Bonjour mes amies! If you grew us anything like moi, you too would have grown up hearing nothing but bad things about credit cards. I often heard that credit cards were designed to keep you in debt, and if someone did have a credit card, it was only to be used in case of an emergency.
Everything I know about personal finance, I had to teach myself.
Throughout my personal finance journey, I learned not only the extreme benefits of having a credit card but the value of having multiple. I would be remiss if I did not mention this, be honest with yourself before opening lines of credit. If you have a troubled history of overspending, and mismanagement of funds, consider a credit card alternative. You only gain value from having credit cards if you can afford to pay what you’ve charged.
Without further adieu, here is what I’ve learned about having multiple credit cards:
- Enhanced Credit Utilization: One of the key factors in determining your credit score is credit utilization. Utilization is the percentage of your available credit that you’re using. By having multiple credit cards with higher credit limits, you can spread out your spending across different cards and keep your credit utilization ratio lower, positively impacting your credit score.
- Improved Credit Mix: Another factor in your credit score is the diversity of your credit accounts. Having a mix of different types of credit, such as credit cards, loans, and mortgages, can demonstrate responsible credit management. Having multiple credit cards can diversify your credit mix and potentially strengthen your credit profile.
- Backup in Emergencies: Having a backup credit card can be useful in case of emergencies or unexpected situations. If your primary credit card is lost, stolen, or temporarily unavailable (I’ve heard horror stories about this from fellow travelers), having an alternative card can provide you with a financial safety net and prevent disruption to your spending or financial obligations.
- Maximizing Rewards and Benefits: Different credit cards offer various rewards programs, such as cashback, airline miles (click here to read how to travel with reward points realistically), or points for specific purchases. By having multiple cards, you can strategically choose the card that offers the best rewards or benefits for specific spending categories. This allows you to optimize your rewards and potentially save money or earn valuable perks.
- Increased Financial Flexibility: Multiple credit cards provide you with greater financial flexibility. You can allocate different cards for different purposes, such as one for everyday expenses, one for travel-related expenses, or one with a low-interest rate for carrying balances. This approach allows you to manage your finances more efficiently and tailor your credit usage to your specific needs.
- Building a Credit History: Having multiple credit cards can be beneficial if you’re new to credit or trying to build a credit history. S’il vous plaît mes amies, be responsible avec your credit card usage. You only benefit from having multiple cards if your payments are consistently on-time. On-time payments on multiple cards show lenders that you can manage credit effectively.
Take away points, be mindful of your spending, pay your bills on time, and avoid carrying high balances or accumulating excessive debt.
Maintenant, I must ask, do you find having multiple credit cards a perk?
Ciao for now 💋