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Some people have a single credit card they make all of their purchases on. Other consumers have multiple credit cards and rotate between them to maximize cash back and reward points.
Neither approach is right or wrong. The upside to having a single credit card is that it’ll be easier to track your spending and manage your bills. And if that card offers a great rewards program, then it may be more than sufficient.
Meanwhile, the upside of having multiple credit cards is getting to capitalize on different perks. And if you’re able to juggle your various bills and their different due dates, then holding multiple cards could also give you more flexibility.
But while some consumers can benefit from having multiple credit cards, financial expert Ramit Sethi says certain people should stick to one card only. Here’s when that advice might apply to you.
Where are you on your credit-building journey?
When you’re new to the workforce or are trying to recover from a financial setback, you may be at a stage where you’re trying to build your credit up. And if that’s the case, Sethi says it’s best to only have one credit card.
But once your credit score has improved and you’re in a good place financially, Sethi says you should feel comfortable expanding to two or three credit cards. And there are benefits to going this route.
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First of all, having multiple credit cards could mean snagging a higher total spending limit. And as long as you keep your charges to a modest level, a higher spending limit could actually help your credit score improve or stay strong by helping your credit utilization ratio stay low.
Also, having multiple credit cards lets you take advantage of different perks. You might have one credit card that offers the best cash back on groceries and another that’s better on gas. Using both regularly could make a lot of sense, as doing so might increase the amount of cash back you’re getting.
It could also pay to add a travel rewards credit card to your rotation. These cards often come with money-saving benefits like discounted in-flight purchases and free checked bags.
What’s the right call?
Sethi is pretty clear that if your credit needs work, it’s best to stick to a single credit card. From there, you have options. But ultimately, you should do what works best for you. You may prefer to keep your financial life simple and stick to one credit card only. Doing so could mean missing out on some perks, but if that’s what sits better with you, go for it.
Remember, the more credit cards you have, the more tempted you might be to make purchases you can’t pay for in full. And having more than one card means having to pay more than one bill every month. If juggling multiple credit cards sounds too tempting or like too difficult a task, limit yourself to one card with a great rewards program and don’t stress about the benefits you may be missing out on.
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