Plastic Money: Should you have more than one credit card?
Credit cards, if used wisely, are useful financial products that give you multiple discounts and offer to help you save money on your daily spending. Though one credit card can cater to all your payment requirements yet, at times, you may need more than one card to accommodate your specific necessities. Often people are on the fence trying to decide how many credit cards they should hold. Here is how to decide on the number of credit cards you should have.
Holding just one card
If you use a credit card for the first time, you may not have a credit history. It means you may not be eligible to apply for exclusive or premium credit cards based on your income and spending. In such cases, you must first apply for a credit card based on your income and spending requirements. Use this card regularly and repay the bill on time to build a good credit score and eventually become eligible for a higher category credit card for more benefits.
Benefits of multiple cards
Every credit card has its distinctive features and benefits. For example, suppose a credit card is offering you some discounts on travel ticket booking, and another credit card may be offering you a discount on online shopping or facility of multiple airport lounge access. To avail of such benefits, you may hold multiple credit cards.
Adhil Shetty, CEO, Bankbazaar.com, explains, “Holding multiple credit cards could get you a higher overall credit limit. If the limit on one of the credit cards is exhausted, you can use another credit card. While using multiple credit cards, you can distribute the spending to your different cards and easily lower your credit utilization ratio, thus improving your credit score. You can get credit cards with different due dates and thus use credit cards for which the statement date has just ended to enjoy the benefit of a maximum interest free credit period.”
Selecting multiple cards
You can choose multiple credit cards based on your financial habits and lifestyle. You can get co-branded credit cards according to your spending pattern. For example, if you often travel in flight, you can get an air miles credit card, if you stay in hotels regularly, you can apply for a travel credit card, and if you often shop online, you can apply for shopping credit cards and so on. Avoid getting cards to cover just one-time expenses. When getting multiple cards, you can get them from different issuers like Amex, Visa, Rupay, Master Card, etc. This strategy can help you avail of multiple offers and discounts.
Ideal number of cards to hold
The number of cards should depend on factors like your spending habits, your lifestyle, your efficiency in managing multiple cards, etc.