How many credit cards can you have?
Credit cards can be handy to manage your finances, but is it a good idea to have more than one and will it damage your credit rating?
There isn’t a limit to the number of credit cards you can have. Credit cards can help you manage your finances in a number of ways and show lenders that you can handle credit. Used correctly, your credit rating won’t be negatively affected and may even improve. However, each card should have a purpose and be used responsibly. Otherwise, you just run the risk of racking up more debt and your credit score could be damaged.
What to consider before applying for multiple credit cards
It’s understandable why you might want more than one credit card. A credit card on its own can help you improve your credit rating, give breathing space between paydays and help manage your money. Having many credit cards could help to take increased advantage of these benefits. However, having more credit readily available brings with it increased responsibility.
So, if you’re already finding it hard to keep up with one credit card, then it might be best, not to get any more credit cards. If you’re making your payments on time and you’re confident that extra credit won’t tempt you to spend more than you have, then having another card could be worthwhile.
What are the pros and cons of having more than one credit card?
Having more than one credit card can help you manage your money when used wisely. However if not used responsibly, multiple credit cards could run the risk of damaging your credit score.
Pros of having more than one credit card
Strengthen your credit score: Probably one of the biggest benefits of having a credit card is that it can boost your credit score. If you use many credit cards responsibly by making payments on time, you are showing lenders you are reliable. A good credit rating can give you access to lower interest rates and bigger loans
Save money: If you’re already paying interest on one credit card, transferring the outstanding balance to a new 0% balance transfer card could reduce your monthly interest payments
Convenient money management: Having more than one credit card can also be a good way to manage your spending. You could use one card for the weekly shop, for example, and have a specialist travel credit card for when you make trips abroad
Extra funds: Each credit card will come with its own credit limit, meaning you’ll have money available if you need to spend it. Having the extra cash on hand can give you the reassurance that if an expensive cost comes up, you should be able to sort it
Consumer protection: Credit card purchases also come with an added layer of protection. Credit card purchases between £100 and £30,000 are protected under Section 75 of the Consumer Credit Act. If you don’t receive your goods or if the retailer goes bankrupt before you get your purchase, you’ll get your money back from your card issuer
Cards for different purposes: All credit cards aren’t the same. There are different types of credit cards and they all have different purposes. Some credit cards help you build credit, some, such as 0% purchase cards, are designed for shopping and travel credit cards are made to be used overseas. So, for example, if you’re a frequent flyer, you could benefit from a travel credit card
Cons of multiple credit cards
Hard to keep track of different payments: If you find it difficult to make timely repayments on your current credit card, it may be best not to apply for another one. To avoid missing card payments and getting hit with late fees set up a direct debit so the bill is always made on time. When setting up direct debits, you still need to make sure that you have the funds to cover the payment
Temptation to spend more: Having multiple credit cards could tempt you to spend more as there’s likely to be more credit available to you. And if you can’t pay off the card in full each month you’re likely to be paying high interest on your borrowing. This can end up being expensive
Could affect your ability to get credit: When it comes to making a new credit application, your lender might look at how much credit you already have. Sometimes, if you have multiple credit cards, the lender could look at the credit limits on all of the credit cards (so the total available credit you have), not just the money you’ve borrowed - and they may view this negatively
What are the different types of credit cards?
There are many different types of credit cards. Some credit card’s purpose might suit you more than others.
Credit builder cards: Made for those with little or no credit history, credit builder cards are ideal for if you’re looking to boost your credit score.
Balance transfer credit card: With a balance transfer card, you can transfer your existing credit card balances (at a higher interest rate or APR) onto one low rate or 0% interest rate card.
Rewards credit card: Rewards credit cards reward you for everyday spending. Rewards credit cards come in different forms; cashback, airmiles, points and retail credit cards.
Purchase credit card: Purchase credit cards are made for shopping and they allow you to spend and pay it off what you owe over a period of time.
Travel credit card: Travel credit cards are made to be used abroad as they don’t charge foreign transaction fees.
Balance transfer and purchase credit card: Balance transfer and purchase cards are hybrid cards. They allow you to transfer your balance to a new card and continue to spend on the card if you need to.
Does having multiple credit cards harm your credit score?
The effect on your credit rating depends on how well you handle your cards. If you regularly miss payments or max out your credit limits, then it could damage your credit score.
But if you use each card responsibly, paying off the balance on time every month, it will give banks confidence that you can handle credit.
Multiple credit cards could help your credit score if you use a smaller portion of the credit limit. For example, you might have two credit cards with a balance of £500 on each versus a single card with a £1,000 balance.
In this example, having two cards means you use less of your available credit, a technique known as ‘debt utilisation’, and in many cases banks may typically view this more favourably.
Bear in mind if you make multiple card applications and they are rejected this can harm your credit score because it makes it look like you are in desperate need of money.
How do I cancel a credit card?
These are the seven steps on how to cancel your credit card:
Pay off your balance: You will need to pay back any money you still owe on the card. The first thing you must do is to clear the balance.
Claim any rewards: Now is the time to spend the loyalty points you’ve built up on your card. You might not be able to redeem points once you’ve cancelled your card.
Cancel regular payments: You should cancel any repeat payments you’ve set up on your card.
Contact your credit card provider: You should be able to contact your card provider online, through the phone or maybe in branch. You should be able to find their contact details on the back of your card.
Send a follow-up email: Once you’ve cancelled the card, send an email to the card provider confirming the account is closed. If there any mistakes with the cancellation you will have this email as evidence
Check your credit report: To make sure your card has been cancelled, check your credit report. It can take up to seven weeks for changes to show on your report, so don’t do it immediately.
Cut up your credit card: It’s important to make sure your credit card has been disposed of properly. Because in the wrong hands, your cancelled credit card could be used for identity theft or fraud.
How to use a balance transfer credit card
Monthly interest payments can really mount up if you have outstanding debt on several credit cards, and for some people these repayments can become a problem.
Balance transfer credit cards are a useful way to consolidate your debts into one place, hopefully reducing the overall amount you have to repay and simplifying your monthly admin.
When you take out a balance transfer card, you have a window of time, typically 60 or 90 days, to move your debts onto it. This can interest-free, though some cards charge a small amount of interest and a transfer fee – usually a percentage of the balance you are transferring.
This effectively buys you time: you can pay off the outstanding debt balance over a number of months without accruing more interest. Some balance transfer cards offer interest-free periods of more than two years.
Other useful guides
Here at MoneySuperMarket, we have a range of useful guides to help you better understand credit cards:
How much does a credit card cost?
Compare credit cards with MoneySuperMarket
If you’re looking to apply for a credit card we can help. You can search our wide range of card deals from leading UK lenders. And searching won’t affect your credit score in any way. We’ll show you your chances of being accepted for each card deal – and if you’re pre-approved for any cards. That way you can apply with greater confidence.
MoneySuperMarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this service. Instead we are usually paid a fee by the lenders, but the size of that payment doesn’t affect how we show products to customers.