Pros And Cons Of Multiple Credit Cards
Posted by: Staff Writer | Jul 15,2007
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How many credit cards should you carry? The average American has eight. According to the latest research,The average American also carries about $10,000 in debt on those eight cards.
The credit card industry is a trillion-dollar business because they've been aggressive about filling your mailbox with credit card offers. Most people have eight cards because they are constantly being offered cards with great starting rates. This allows them either to transfer balances from older higher interest paying cards or to have the power to make some new purchases. The problem becomes the tendency for people to spiral into greater credit card debt.
Pros of Multiple Credit Cards No. 1: Several Credit Cards Give You OptionsThere are times when a card for some reason is not functioning. Perhaps you're out of the country and didn't notify your bank. Suddenly your Visa card is denying a purchase in Istanbul. However, if you also carry an American Express, you have the power still to make your purchase.
Another option is that while almost all places accept the same major credit cards, not all places do. Having several cards in your wallet lets you avoid this issue.
Pros of Multiple Credit Cards No. 2: Saving MoneyTaking advantage of a lower interest rate will save you money if you're not paying off your bill in full each month.
Pros of Multiple Credit Cards No. 3: Build Up CreditHaving several cards with low balances that are paid in full each month definitely looks good on a credit report, particularly if you can establish a long history of doing so. Experts estimate that one year of on-time payments will help you raise your FICO score.
Pros of Multiple Credit Cards No. 4: Credit in an Urgent SituationIf you needed to have the power to make large purchases, such as in a medical emergency or a natural disaster, you could access your cards.
Pros of Multiple Credit Cards No. 5: Different Cards Means Different Rewards ProgramsPerhaps one of your accounts gives you frequent flier miles while another rewards you with cash back.
Cons of Multiple Credit Cards No. 1: Many Bills to Pay Each MonthThat means variable due dates to watch out for. You are increasing your chances of making late payments and raising your interest rate on your cards, which credit cards have the power to do in case you didn't know.
Cons of Multiple Credit Cards No. 2: Falling into Heavy DebtIf your ability to repay the debts you run up in any way is hampered - perhaps your hours at work are reduced or you incur a new big debt like a new roof - you could begin the spiral that ends with heavy credit card debt, a sinking credit score and possibly even bankruptcy court.
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