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Are credit cards a blessing or a curse?

That’s a loaded question with no one-size-fits-all answer. Your stance on credit cards depends on various factors, from your personality to your financial acumen. Owning a credit card is a significant decision that demands careful consideration.

Before diving into the world of “plastic money,” ask yourself a few key questions:

  • What’s your current financial situation? Is it conducive to building credit?
  • Are you enticed by lucrative offers from financial institutions? Are they genuinely worth it?
  • Do you have control over your spending habits?
  • Do you grasp how credit cards operate?
  • Do you genuinely need one?

These questions all distill down to a singular factor: the cardholder.

Some fear losing control over spending habits with a credit card, while others proudly flaunt a wallet packed with various cards for different occasions and purposes. There’s no right or wrong here, just personal choices.

But if you decide to embrace the world of “buy now – pay later,” how do you handle the “paying later” part? This leads to more questions and concerns:

  • Can you pay the full amount in one go, or will you opt for the easier route of minimum monthly payments?
  • Will paying the minimum balance help you escape debt?
  • Is this a responsibility you’re ready to shoulder?

Failure to address these questions correctly could lead to financial pitfalls. 

Spend less- Save more!

Not paying off your card debt on time, with additional interest piling up, could trap you in a cycle of debt. If you don’t have clear answers to these questions, it’s probably (definitely) wise to resist the allure of multiple cards.

Remember the age-old wisdom: saving beats spending any day.

Now, let’s get to the facts. What are the tangible benefits of having multiple credit cards?

Positive Effects:

Increased Credit Score:

  • Maintaining and paying balances on multiple cards can boost your credit score. Distributing your spending across cards and staying below the 30% spending limit is generally a good practice.

More Rewards and Offers:

  • Multiple credit cards mean more opportunities for rewards, discounts, cashback, and financial perks. Explore these offers by keeping and managing multiple cards.

However, here are potential downsides to consider:

Potential Debt Trap:

  • Owning too many credit cards may lead to accumulating too much debt, creating a cycle that’s detrimental to your financial health.

Charges and Interests:

  • Multiple cards often bring multiple charges, from joining fees to renewal fees, late payment fees, annual fees, and more. Read the fine print carefully.

In conclusion, credit cards aren’t inherently good or bad; they’re financial tools. Treat them with respect, caution, and a willingness to learn. If you can manage your spending habits and don’t have significant liabilities, credit cards should work fine.

But don’t just take our word for it; conduct your due diligence. Every person’s financial situation is unique.

If you want to discuss your financial situation and make informed decisions, our team of Moolaah Partners is ready to assist you. Sign-up for free today and say goodbye to financial stress.

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Moolaah is an independent wealthtech ecosystem, with the aim of delivering a better financial future to individuals and families with the help of expert advisors.

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