How many credit cards can I have?
There’s no definitive number for this. If you have a poor credit history you might struggle to be accepted for multiple credit cards. If you have a good credit history, you could be accepted for two, three, four, or even more.
If you’re thinking about taking out more than one credit card though, the deciding factors should be:
a) how you plan on using your plastic, and
b) what type of borrower you are.
The advantages of multiple credit cards
- for starters, you’ll have access to more credit, which could come in handy in the event of an emergency
- having multiple cards opens you up to a range of different benefits and rewards - like 0% interest cards, air miles, or cashback, for example.
- if you use your credit cards responsibly (i.e. only spend what you can afford, stay below your credit limit and stick to at least the minimum payment each month and pay on time) you’ll leave a positive trail on your credit history, improve your credit score, and open yourself up to more competitive lending options in the future - for credit cards, loans, mortgages, or otherwise
The disadvantages of multiple credit cards:
- the more cards you have, the more payment dates you have to keep on top of, and the more likely you are to miss one - and missed payments play havoc with your credit score
- on top of that, having access to too much credit can put some lenders off. Even if you’re not using what’s available to you, it can lead them to believe you’ll struggle to repay theirs back, which can reduce your odds of being accepted
How many credit cards should I have?
The answer to this should be personal to you. If you’ve got a spotless credit history, you’re uber confident in your ability to juggle a number of repayment dates, and you’re planning on using your plastic to cover manageable amounts of spending each month, there’s probably no reason you shouldn’t trust yourself with a handful of credit cards.
If, on the other hand, you’re not great at remembering different payment dates and you can’t say with complete confidence you’ll be able to repay what you spend, it’s probably best to stick to one credit card - or two at the absolute most.
And remember, missed payments can result in extra interest and charges. So, if you were to miss several different instalments in a single month, it could very quickly become an expensive way to borrow.
We’d never recommend taking out multiple cards for the sake of it. Instead, set yourself a personal limit and take out only the number of credit cards you need to fulfill that number.
Multiple credit cards and bad credit
As we touched on a little earlier, if you’ve got a bad credit history you might struggle to be accepted for one, never mind two credit cards. Whether you’ve missed a payment or defaulted on a loan or mortgage in the past, it all shows on your credit history and highlights you as a risk to future lenders.
If you already have a less-than-perfect credit history, it’s probably best to work on improving your credit score with something like a credit building credit card before you explore taking out a second or third. Remember that to build your credit score and potentially be eligible for credit limit increases, you should use your card sensibly by making your monthly minimum payment on time and staying below your credit limit. Not doing so could harm your credit score.
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Average UK credit card debt
The average UK household has £2,655 worth of unpaid credit card debt hanging over them. For a lot of us, that’s a lot more than one month’s take-home salary, which is why it’s so important to only spend what you can afford to repay.
With interest and fees applied to any outstanding credit, having a hefty unpaid sum can soon make credit cards pretty pricey. To keep costs down and manageable, it’s best practice to repay your balance in full at the end of every month - this will keep you from paying any interest at all.
Can you cancel a credit card?
If you’ve taken out more than one credit card and have since had a change of heart, you certainly can cancel one or more of them. To do this, just:
- clear off any outstanding balance
- cancel any direct debits and transfer them to a different account
- call your provider and let them know you want to close your account
Will cancelling credit cards affect my credit score?
This one’s a bit of a grey area. Some lenders see unused credit as a warning sign - they worry you might go out on a spending bender, splash it all, and then be unable to pay them back.
Other lenders, on the other hand, like to see you have, £1,000 of credit available to you, but have only spent £300 of it - this is known as your credit utilisation ratio. They don’t want to see a ratio of 100% (i.e. you’ve maxed everything out), but they also don’t want to see it sitting at 0%. According to different credit reference agencies, the sweet spot is around 20%-30%.