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?
Key takeaways
There isn’t a limit to the number of credit cards you can have, but the risks of having multiple cards may outweigh the benefits
More credit may encourage excessive spending and lenders may view high limits as financial risk
Different credit cards serve different purposes, so understand your reasons for needing a card before you apply
Frequent missed payments or maxed-out limits may harm your credit score
When it comes to managing your finances, credit cards can be a double-edged sword. They offer convenience and the potential to build your credit history but they can be a gateway to debt if not used responsibly.
What should I consider before applying for an extra credit card?
Before you decide to apply for additional credit cards, consider the implications. While having more than one card might give you more credit and spending flexibility, it also demands more financial discipline.
If you're already finding it challenging to stay on top of the payments for one credit card, it may be wise to reconsider applying for another.
However, if you're able to make payments on time consistently and are confident that more credit won't tempt you to overspend, then having multiple credit cards could be advantageous.
Each card should have a purpose and be used responsibly to avoid the risk of racking up more debt. It's also a good idea to set up direct debits for your payments to ensure you never miss a payment, and to make sure there are sufficient funds in your account to cover the payments.
What are the pros and cons of having more than one credit card?
The decision to hold multiple credit cards has of advantages and disadvantages. These include:
Pros of having more than one credit card
Strengthen your credit score: When used responsibly, multiple credit cards can demonstrate to lenders that you're creditworthy, potentially leading to better loan terms in the future
Save money: If you have debt on a high-interest card, transferring the balance to a card with 0% interest can save you money on interest payments
Convenient money management: Using different cards for different types of expenses can simplify budgeting and tracking of your finances
Extra funds: Having more than one card increases your total available credit, which can be helpful for unexpected expenses
Reduces credit utilisation: If you have more credit available, but use a lower proportion of it your credit utilisation will decrease. This is often seen as a positive sign by credit rating agencies because it suggests your finances aren’t as stretched
Consumer protection: Credit card purchases also come with an added layer of protection. Purchases between £100 and £30,000 are safeguarded under Section 75 of the Consumer Credit Act, ensuring you get your money back if there's an issue with your purchase
Cards for different purposes: Not all credit cards are created equal. There are different types of credit cards, each designed for specific uses, such as travel or shopping
Cons of multiple credit cards
Hard to keep track of different payments: Juggling several cards can complicate financial management, leading to missed payments and extra fees
Temptation to spend more: With more available credit, there's a greater risk of overspending, which can result in significant debt and interest
Could affect your ability to get credit: Lenders may view holding multiple cards with high limits as a sign of financial risk. They might look at the total available credit you have, not just the money you’ve borrowed, and this could be viewed negatively in a new credit application
Why might I want to have more than one credit card?
There are a few reasons why having more than one credit card might be beneficial. Here we look at some examples:
0% deals: You want to make a high value purchase and pay it off over the next six months without interest. A new 0% interest card achieves that, but you retain your original card because it has other benefits, such as cashback
Earn rewards: You add a rewards card linked to a certain retailer where you shop regularly. This gives helps you maximise perks on specific purchases, but you don’t use the card for other spending
Dedicated travel spending: A travel card with no foreign transaction fees and travel perks save you money abroad, while your original card has better features for everyday domestic expenses
Spread costs or manage debt: A balance transfer card helps consolidate debt or reduce interest payments, but has a high interest rate for purchases. As such, you keep your original card for ongoing spending needs
Build or improve credit score: An additional card responsibly managed helps boost your credit score, while keeping your original card helps maintain a low credit utilisation, which is also helpful for your credit rating
What are the different types of credit cards?
Credit cards come in various forms to cater to different financial needs and goals:
Credit builder cards: Credit builder cards are tailored for individuals with minimal or no credit history, helping to establish a credit score
Balance transfer credit card: A balance transfer card allows you to move existing debt to a card with a lower interest rate, which can be as low as 0%
Rewards credit card: With rewards credit cards, your spending earns you rewards such as cashback, air miles, or points
Purchase credit card: Purchase credit cards are meant for shopping, enabling you to spread out the cost of your purchases
Travel credit card: Travel credit cards are designed for use abroad and typically do not incur foreign transaction fees
Balance transfer and purchase credit card: Balance transfer and purchase cards offer the flexibility to transfer debt and also continue spending on the card
Personal Finance Expert
Our expert says
“While there is nothing stopping you applying for multiple credit cards, consider whether it’s in your best interests.
"If you regularly clear the balance on your existing card on time, but it’s not serving you well enough – it’s expensive to use abroad, for example, then it might be worth looking for another card.
"But if you’re struggling to meet interest payments, then getting an additional credit card is only likely to make this worse.”
Other useful guides
MoneySuperMarket provides an array of guides that can help you understand the intricacies of credit cards, such as:
Compare credit cards with MoneySuperMarket
To find the best credit card deal for your needs, MoneySuperMarket offers a comparison service that doesn't impact your credit score.
It provides a clear picture of the deals you're likely to be approved for, helping you make an informed decision. You will also see your chances of being accepted for each card deal, including pre-approval status.
MoneySuperMarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead, we are usually paid a fee by the lenders – though the size of that payment doesn’t affect how we show products to customers.
Does having multiple credit cards harm your credit score?
The impact of multiple credit cards on your credit score varies depending on how you manage them.
If you're diligent about making payments and keeping your credit utilisation low, multiple cards can actually be beneficial. They can show lenders that you're capable of handling credit well.
However, if you're frequently missing payments or maxing out your credit limits, it could have a negative effect on your credit score. Additionally, having several rejected credit card applications can also damage your credit rating.
How do I cancel a credit card?
If you decide that you no longer need a credit card, here are the steps you should follow to cancel it:
Pay off your balance: Ensure that any remaining debt on the card is cleared
Claim any rewards: Redeem any accumulated loyalty points before closing the account
Cancel regular payments: Make sure you stop any ongoing subscriptions or direct debits linked to the card
Contact your credit card provider: Inform them of your decision through phone, online banking, or by post
Send a follow-up email: It's good practice to confirm the cancellation in writing with an email or letter
Check your credit report: After some time, verify that the account has been closed by checking your credit report
Cut up your credit card: Destroy the card properly to prevent any fraudulent use. Properly disposing of a cancelled credit card helps prevent identity theft or fraud
How do you use a balance transfer credit card?
A balance transfer credit card can help consolidate debt and reduce interest payments. These cards offer a limited-time opportunity to transfer existing debt, often with an interest-free period.
This effectively buys you time to pay off the outstanding balance over a number of months without accruing more interest.
Some balance transfer cards offer interest-free periods of more than two years, which can be a significant financial relief.
There is usually a one-off fee for transferring the balance, but this is often outweighed by the savings in interest payments.
