It is super convenient to have a wallet that has multiple credit cards. The important question remains how many credit cards should you ideally have. If you want a basic credit card for occasional use to probably make small payments online or offline, then having one credit card might be sufficient but if you are looking to maximize your rewards or to build your credit score then having at least two credit cards could be a great strategy for your long-term goal. Here are some of the reasons as to why you should have at least two credit cards.
Reasons why you should opt for another Credit Card
There are multiple benefits when it comes to having an additional credit card. One of the main reasons is to gain as many rewards as you want and to build up a strong credit score in the long run. Some other benefits of having another credit card include:
Credit Cards with Various Benefits
Having different credit cards can help you earn some great rewards and bonus points on every purchase that you make. While your one credit card might be limited to a particular credit limit and purpose, you can make use of the other credit card in order to stabilize your finances and Reward Points. Be it travel, your daily groceries, dining and movies – these categories have a lot to offer when it comes to discounts and Reward Points. For instance you may have an excellent travel credit card but it may not necessarily be great for cash-backs or other categories. So in this case if you have two or multiple credit cards, you can easily earn more rewards and discounts depending on the type of credit card.
Also Read: 5 Best Rewards Credit Cards
Helps in Strengthening Your Credit Score
This might sound a bit odd at the first place but having multiple credit cards can actually help in improving your credit score. The important point to note here is that the number of credit cards doesn’t really determine your credit score; it’s how you use them. So if you have numerous credit cards and do not pay your bills timely, this might do some great damage to your credit score. While if you are punctual about your credit card billings and do not have any previous debt, this will help you improve your credit score to what it was before.
For instance if you have a single credit card with a credit card limit of Rs.1 lakh and you spend Rs.80,000 from that card on a monthly basis, this implies you are spending at least 80% of the credit limit that is there on your card. But this is what hurts your credit score the most. Irrespective if you paying the entire amount of Rs.80,000 in your net billing cycle, the financial lenders would not get a good impression of your credit score. On the other hand, you can have four credit cards at a time and with each of them if you spend only 30% of the credit limit, not only your credit score improves, but your credit limit also overall increases. The way in which credit score is calculated is mostly that financial lenders would never recommend in spending more than 30% from your credit card. It does not matter if you have a single credit card or multiple of them. If you know how much you are spending and you do it responsibly, your credit score can actually improve massively.
Serves as a Back Up
In case of any accidental emergency, cash crunch or your credit card being stolen/lost, having a backup option is always advisable. You will need another way to pay for the expenses. Because of such unfortunate situations, it is better to have at least two or more credit cards with which you can easily balance the other expenses.
How to manage multiple Credit Cards?
If you have or if you want to use several credit cards, keeping some tips in mind can help you manage credit cards with ease.
- Define one function for each credit card
To get the best from each credit card, identify where they can be best used for. A travel credit card can be best suited for travel benefits and travel rewards. Another basic credit card for your daily expenditure should be helpful in balancing your finances.
- Focus on the Statement Due Dates
With multiple credit cards, it is normal to struggle with each statement due dates. Some financial lenders let you decide the payment date. You can keep one date for all your statement dues or even out different dates for all the cards in a month. It could be extremely helpful if you align the due dates for all your credit cards.
- Pay your balances on time
The basic rule for credit card is this – pay your balances on time always. This golden rule directly impacts your credit score. Along with paying off your monthly dues, it is important to clear all your balances before your due date. Late or missed payments can make a negative impact on your credit score.
- Keep a check for your credit card costs
Having a document with updated spending on each credit card is helpful. This way, you can track the excessive spending that are being done with your credit cards and you can consider canceling any of them if you feel it isn’t working for you.
Having multiple credit cards will indeed get you some great deals, discounts, offers, cash-backs and Reward Points. However, this is should not be the strategy to pay off all your debts. You need to be careful about the excessive spending the interest rate that are charges on each card. Certainly, shuffling between multiple credit cards is not for people who need something new and luxurious every month. Go for at least two or multiple credit cards only when you are sure about your organized payments. Self-discipline and management are the key to maintain a good financial lifestyle.