Having multiple credit cards can harm you
CREDIT card junkies signing up to multiple offers could be harming their credit files and leading themselves down a path of financial mayhem.
Latest Reserve Bank of Australia data shows cardholders have amassed more than $52.4 billion on credit cards and more than $31.8 billion is accruing interest.
But new findings from financial comparison website Finder.com.au has revealed 40 per cent of Australians have at least one card, 19 per cent have two cards and 8 per cent have three or more cards. The remaining 33 per cent do not have a credit card.
Crown Money Management's chief executive officer Scott Parry said signing up to more than one card usually means multiple fees and also interest charges if the cardholder is not paying off their card in full each month.
"It's tough to keep track of the cards and you will also be of the mindset you are not at the limit of your cards so you can still afford to spend,'' he said.
"This is setting yourself up for failure.
"It can also reduce the amount of money you can borrow when you go to buy an actual asset like a home and your credit history makes you look like a credit junkie.
"When banks look at your credit file and see credit card, credit card, credit card there is massive alarm bells there."
Many credit cards attract interest rates on above 20 per cent and some cards have annual fees that run into hundreds of dollars a year.
But Finder.com.au's spokeswoman Bessie Hassan said having multiple cards only becomes a problem when the customer is not responsible with them.
"If you don't pay them off on time and let your balances get too high - you could have a problem with plastic," she said.
"Many people see a credit card as a rite of passage but out of control balances can be a real barrier to your financial future, so keep your situation in check."
Comprehensive credit reporting now makes it easier for lenders to make an assessment of an applicant's credit history.
This includes what credit accounts are held, what accounts have been opened and closed, the date any default notices were paid and how well a customer meets their repayments.