Michael D. Hart, P.C.

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The pros and cons of having multiple credit cards

| Jul 3, 2019 | Chapter 13 Bankruptcy |

It isn’t uncommon for Virginia residents and others to have more than one credit card. In fact, there can be a variety of benefits to having multiple cards. Those benefits include having more money to handle an emergency situation and a greater chance of having a lower credit card utilization rate. However, it is important to know how to manage credit card debt as it can be easy to use the entire available balance or forget to make a payment.

It is important to know that a credit score can go down simply by applying for a credit card. This is because a lender will likely perform a hard inquiry before approving or denying an application. Furthermore, paying multiple annual fees can erode a cardholder’s overall purchasing power. It may also reduce the value of any rewards points or cash back that a person receives by using a card.

The more credit cards a person has, the easier it can be to spend more than he or she is able to repay in a timely manner. Individuals are encouraged to consider whether they have the discipline to keep their spending to a reasonable level before applying for additional credit. They should also consider whether a temporary reduction to their credit scores is worth the opportunity to obtain that new card.

Individuals who are having trouble managing their finances might benefit by filing for Chapter 13 bankruptcy. In a Chapter 13 proceeding, debts are repaid over a period of three to five years. If there is a balance remaining on a given debt, it may be discharged at the end of the repayment period. While a bankruptcy case is open, creditors are generally unable to contact debtors for any reason. Instead, they must make contact with the debtor’s attorney.