In this day and age, owning more than one credit card is the norm. People have accounts with several banks, and also carry credit cards offered by different banks. If you use your credit card for all your purchases and make your payments promptly, you will be able to maintain a good credit score. This is a great practice to follow for managing your finances efficiently.
If you are wondering whether you need multiple credit cards, we will help you decide. Let us discuss the advantages and disadvantages of having multiple credit cards:
Advantages of having many credit cards:
- Specific cards for specific purchases: When you have many credit cards, you can use each card for different purchases. You can keep one card for online purchases, balance transfers from one to another , one for buying groceries, one for electronic goods, one for buying a new car, one for clothes, and so on. This will help you keep an eye on your expenditures. You can also watch out for fraud or theft when you use a certain card for specific needs.
- In case of loss of card: In case you lose one credit card, you can use your credit cards for purchases, while you wait for your lost card to get replaced. You will not feel stranded during such times.
- For foreign transactions: When you are travelling to foreign countries, in case you cannot make transactions with a certain credit card, your alternate credit card can come to your rescue.
- Benefits given by different cards: Many credit cards are designed uniquely for different purchases such as for travel, for dining, for entertainment, for shopping, etc. Depending on the particular rewards offered by each card, you can decide which card to use. If a card gives good warranties or protection, you can use it buy furniture or electronic appliances. You can use cards that give cashback for dining or for movie tickets.
- Avoid interest fees: You can try avoiding payment of interest fees by moving the balance of your credit card to a new card with a lower annual percentage rate.
Disadvantages of owning many credit cards:
- Tough to manage: If you have numerous credit cards, you may find it hard to manage them properly. You may miss due dates or you may make wrong payments without realising. If you fail to make payments on time, your credit score can go down.
- Effect on credit report: When you apply for multiple credit cards, your credit report may get affected adversely as lenders may sometimes perceive that you are inclined to higher credit risk.
- Debt accumulation: When you have multiple credit cards, you may have a lot of debt if you do not use your cards wisely.
If you think you will be able to pay your dues on time, you can definitely go for multiple credit cards. If you follow this practice, your credit score will also not get damaged even when you have several cards. Having many cards will give you a wide range of benefits, rewards, and points. However, be careful while applying for a new card to solve your existing financial troubles, as a new card can add new debts.