Do I need another credit card?
Before applying for an additional card, it's worth weighing up whether it actually solves a problem you have, or simply adds another payment to keep track of. Having more than one card only makes sense if each card has a clear purpose.
If you're already finding it difficult to keep on top of payments on your existing card, taking out another is unlikely to help. But if you manage your current card comfortably and a new one would genuinely serve a different purpose - lower interest on a big purchase, cashback on everyday spending, or no fees while travelling - it can be a reasonable next step.
Setting up a direct debit for at least the minimum payment on every card you hold is one of the simplest ways to avoid a missed payment denting your credit score.
How multiple credit cards can affect your credit score
Holding more than one credit card isn't inherently good or bad for your credit score - it depends on how you manage them.
Used responsibly, multiple cards can work in your favour. Making payments on time and keeping your balances low relative to your credit limits (known as credit utilisation) shows lenders you can manage credit reliably. Having more available credit while using a smaller proportion of it can help lower your utilisation rate, which credit reference agencies may view positively.
Used poorly, the same cards can damage your score. Missed or late payments, maxed-out limits, and a string of rejected applications in a short space of time can all count against you. Every credit application also triggers a hard search on your credit file, which can cause a small, temporary dip in your score.
As a rule of thumb: it's not the number of cards that matters most to lenders, but whether you're managing all of them well.
Pros and cons of having more than one credit card
Pros
Can help build your credit history when managed responsibly
Lets you use different cards for different purposes, such as one for everyday spending and one for a 0% purchase or balance transfer
Increases your total available credit, which can help lower your credit utilisation if you keep spending steady
Cons
More payments and due dates to keep track of, which raises the risk of a missed payment
Easier to overspend when you have more available credit across multiple cards
Lenders may see a high total available credit limit as a risk factor, even if you're not using all of it
Exploring different types of credit card
Here’s a list of popular credit card types, so that you can work out what kind of card you want and from that, how many cards you should have at any one time.
Low-APR credit cards
Cards with a low APR, or annual percentage rate, may be suitable for those who want one card that will last for a while as a consistent source of credit.
You won’t, on the whole, get any extra benefits from these cards beyond a low borrowing cost, but this should be enough of an incentive in itself.
0% purchase cards
There are cards available that will, for a set period of time, charge you 0% interest on purchases made. This makes these cards essentially an instant, free loan while the interest free period is active.
Once the interest-free period finishes on a 0% purchase card, the rate charged is often much higher than average, so it's worth reviewing how you're using it. Whether it's worth closing the card altogether will depend on your wider circumstances, including any impact on your credit profile.
0% balance transfer cards
Cards that charge 0% on balance transfers can be a great tool if you want to escape existing debt.
What they allow you to do is to transfer debt from an existing card on to your new balance transfer card and thereby delay paying interest on the initial debt until the 0% period ends on the new card.
Reward and cash back cards
If you’ve got a decent credit rating, and are confident in your ability to keep up with repayments, then a rewards based card could be just the thing for you.
These cards offer rewards like cash back on certain purchases or points redeemable on flights for every pound spent.
Rewards and cash back cards tend to come with relatively high annual percentage rates, or APR, and so you should only really take one out if you’re sure that you’ll be able to pay the balance off each month.
Credit building cards
Credit building cards are designed for people with poor or limited credit histories. They come with high APRs and low credit limit to promote or ensure responsible credit use.
By spending on these cards and paying off the balance regularly and in full, you’ll improve your credit score over time by proving your ability to use credit properly.
Once your credit score has improved sufficiently, you’ll be able to then take out better credit cards in the future.
Comparing cards online
Compare credit cards by APR, fees, rewards and introductory offers to find the type of credit card that suits your needs.
Deciding whether to cancel existing cards
Unused cards can sometimes have a negative effect on your credit rating, so it's worth periodically reviewing which cards you hold and whether you still need them.
If you took out a card for a 0% period on purchases or balance transfers, it's worth reviewing whether it's still worth keeping once that period ends, as rates are usually much higher afterwards. That said, closing a card isn't automatically the right move for everyone as it can reduce your total available credit and shorten your average account age, both of which can affect your credit profile.
Generally, cards worth keeping long-term are ones with a decent credit limit and as low an APR as possible, so you can keep using credit comfortably without worrying about high bills building up.