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Is it Worth Having Several Credit Cards?

by James McGregor

There are some people that have more than one credit card and this might be something that you are considering as well. There are advantages and disadvantages and it is well worth considering them before deciding whether this will be a good decision for you or not.

Interest Free

Sometimes it is possible to find a credit card that has an interest free period. These can be used to your advantage, as long as you are careful. The cards can be used like a normal card but you will not be charged any interest on the outstanding balance. What some people do is use the card and then put aside the money they would have used to make their monthly repayments in a savings account and get interest on it. Then, when the interest free period is up, they repay the card in full and therefore have no interest to pay at all. This is something which should really only be used by people that have good self-discipline and know that they will not spend the money that they are putting in their savings account so they will definitely be able to repay the card. It is a risk and for someone that knows they are likely to be tempted to spend the money, is not worth taking. This is because once the interest does start to be charged, it is likely to be high compared to other credit cards and so you may end up paying out more in interest on the card than you gained in interest on the savings.

Cashback and Card Rewards

There are some credit cards that offer cashback or other rewards when you spend money on them. It will often be the case that you will get back a percentage of what you spend on the card. This can be worthwhile, even though it is likely to be a small amount. Therefore, some people may take out a card in addition to their regular one, because it offers better rewards than the one they currently have. They may even spend so much money on the card that they need a second one as they spend up to the credit limit. This is another risky thing to do though as it could be the case that you spend a lot on the card and do not pay it back in full each month. The interest that you will be charged, will be higher than the cashback or any rewards you have gained. These cards are also likely to have a higher interest rate than a regular card, just to cover those reward payments the lender has to pay for. So, you need to only consider these if you are confident you will repay them in full each month or if you have calculated that the reward is worth more than the cost of the interest that you are paying.

More Credit Available

If you spend a lot of money, then you may have spent all the credit available on your card and feel that you would like a new one so that you have more money available. While it is nice having extra money available to spend, this could be problematic. Even if you decide not to repay the card in full each month, you will still have to pay a minimum amount which will include the interest charge. You may find that you cannot afford to make an extra monthly payment. If this is the case, then you will have even higher charges as there are fees if you miss the minimum payment. You will also find that the debt could build up and you will have to repay it at some point. Think carefully about whether you really want to keep paying out those interest charges all the time or whether it would be better to repay what you owe instead and then you will not need to pay those interest payments. It can be too easy to see the cards as a way of buying more things that you want and forget about the charges that you will pay for this privilege. Imagine if those goods cost their ticket price plus a years credit card interest, you would probably not buy them, but that is what you will pay for them.

Spend more Money

You may end up spending more money because you have access to more. You may think that this is a great thing because it means that you will be able to buy more things. Some people really love having new things and it makes them happy but do be careful to make sure that you are not trading short term happiness for long term stress, when you have to face up to repaying the credit card. However, it can be really easy to forget that you will need to repay this money at some point. You will be charged interest on it if you do not repay it when you get the next bill and you will need to repay it at some point. Make sure that you are aware of the fact that you will need to repay and think about the interest costs as well. Then decide whether you think that being able to spend more money will work out well for you or not.

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