This may be a common concern but owning more than one credit card might help boost and strengthen your credit score, making it easier for you to keep your debt utilisation ratio low. However, it can be harder for you to manage. If you aren’t financially steady, owning multiple credit cards can be dangerous because it exposes you to a higher chance of missing payments for a specific account and potentially drowning you in debt.
The rule of thumb is if you’re not able to pay your balances on time and in full, commit to just one card for now.
While there are many benefits to keeping a credit card in your wallet, but there are some risks, too. The main risk is raking up debt – so always ensure that you’re able to make payments every month, or set a credit limit to an amount that you’re comfortable with.
When used strategically, credit cards can help you establish a solid credit history, help you manage your finances better, earn rewards on everyday purchases and obtain interest-free payment plans. The trick to using these benefits is to use them to pay for items you’d buy anyway, and not use it as a tool to spend beyond what you're able to. Also, always remember to pay your bill in full and on time every month to keep your credit utilisation rate low.
This article is brought to you by CIMB as part of our ongoing efforts to raise the level of financial literacy among Malaysians. Financial knowledge and understanding are key to making well-informed and meaningful financial decisions that will improve all our well-being. This, in turn, achieves CIMB’s purpose of advancing customers and society.
