Keeping debt under control is very important for your financial future. One thing that you can consider is to eliminate the number of credit card you are using. But is that really a good way to control your spending? Not if you are interested in improving your credit score, and these are the reason.
One of the most misunderstood concept in financial is the credit score. Many people are under the misconception that they must close credit accounts that they are no longer use to help improve their score. This is plain and only a fake. If you close an account, you no longer have a history on your record, nor is the credit limit included in the calculating of your score.
There is no specific number of credit cards that can ensure an excellent credit rating. The lender does not care about the number of cards you use, but they focus on the ratio of debt to available credit, the lower the better. Your debt to credit ratio is calculated by dividing your total debt by your total available credit. For example, if you have a total card credit limit of $ 5,000, and have used $ 2,500 of it, then your debt to available credit ratio is 50%.
There are advantages beyond your credit score for using more than 1 credit card responsibly.
Older account has a value
Keeping the accounts open can give longevity to your credit history. In fact, by closing credit account you may suffer adverse effects that lower your credit score. For people with multiple cards, the effects will be greater.
Lower interest rate
Having more than 1 card give leverage when you are shopping for a lower rate. Use this information to appeal to your current lender to match or improve the rate you are paying. Consider whether a balance transfer is advantageous to save your money on interest and fees.
Emergency Benefits
Keeping an active, unused credit card stashed away in a safe place is like insurance in case of an emergency that need financing, such a house fire or theft. Check the travel benefits and rewards of your card before go travelling. Maybe there are services that can help with language and cultural barriers, currency issues and technical problems. Take advantages of free services like car rental and travel insurance.
Also, always carry more than one card during the trip, in case of you lose your wallet or purse. Multiple cards can help in an emergency situations where you can not pay your purchases with a card that is denied or when the card company puts your account on hold cause they are suspicious of your travel activities.
Internet security benefit
Designate a certain credit card that is only used for online purchasing. This allows you to monitor all the cards activities, recognize fraudulent purchases and help put a stop to identify theft attempts before the damage is done. If more than one credit card is used for internet shopping, it is more difficult to spot unauthorized purchases.
Maximize your rewards
One of the benefits that perhaps more difficult to navigate is the ability to achieve the maximum rewards. The only way it works is if you pay off the balance on all cards each month. But if you can manage the juggling, you can use specific cards for specific purchases to maximize the payback.
The using of multiple credit cards responsibly can help improve your credit score, make funds available in case of emergency situations, and give additional online, travel and purchasing security and advantages. With more than 1 credit card can help keep work purchase separate from personal shopping and make pinpointing deductions easier for tax purposes.