How Many Credit Cards?
Do you know there are about 10 million credit cards in circulation in Singapore? That’s an average of about 2 credit cards per person! There really isn’t a magc number of credit cards one should have, its about what you do with them.
Impact on Credit Score
A credit Score is a number used by lenders as an indicator of how likely an individual will default in a debt. It is an independent assessment of the individual’s credit risk. While having more credit cards may not affect your credit score, late payments on your credit cards will. So if you have too many credit cards and have a problem tracking all their billing cycles, it is best to keep to 2 or 3 credit cards in order to keep a clean credit record.
More Cards Means More Benefits
Many people use credit cards not just for the convenience but for the rewards and discounts you can get. You can use one card that has a high cashback rebates for daily spending, or one where you earn air miles for free air tickets if you are a frequent flyer. Since you are going to spend the money anyway, using the right card helps to maximise the rewards you can get.
Depending on your lifestyle, it may be more worthwhile to focus on just 2 or 3 credit cards and concentrate the highest percentage of your expenditure on these cards. This is because spreading your spending over more than 5 cards may end up diluting the amount of rebates you earn since you spend less per cards. As well, most cashback cards require a minimum spend per month, so not hitting this minimum amount because your expenditures are too spread out is just counter-productive.
Too Many Credit Cards Can, However, Drag You Down
Many card-holders are tempted to sign up for new credit cards because of many great sign-on benefits. These can be a free luggage, cash rebates on your first bill or bonus air miles in your first month. Some card holders convince themselves that they will cancel the card after redeeming the initial benefits, but truth be told, most of us either forget about it or can’t be bothered to go through the hassle of administrative paperwork. So the card ends up in our wallet, together with five other cards that are left there with the same initial intention.
If you do not ‘clean up’ your wallet, these cards can incur unnecessary annual card fees and become time-consuming to maintain given the different billing cycles from the individual issuers.