Some people restrict the number of credit cards they own to just one as they feel that multiple cards will lead to unnecessary expenditure and increase in credit card debt.
But this holds true for people who are not financially disciplined. If you are not a spendthrift, you should not limit yourself to just one credit card.
Following are some of the reasons why you should have more than one credit card.
1. Your increased credit limit will help in improving your credit score
More credit cards means higher credit limit. But if you spend the same amount and spread it over 2–3 cards instead of one, your utilization percentage (what percentage of your available credit limit you use on a monthly basis) on each card will be lower. Credit bureaus give higher score to people with low utilization percentage. Therefore, having more cards will help you increase your credit score.
2. More credit cards mean more benefits
Different cards offer different benefits. You can’t enjoy all the benefits on a single card. If you are a frequent flier you would benefit more by using a travel credit card. But if you are also a shopaholic, a shopping specific credit card will prove to be more useful by way of discounts available through reward points. Such types of cards are known as co-branded cards. In case of co-branded cards, credit card issuers at times collaborate with merchants to provide attractive discounts to cardholders. These cards also provide benefits of regular cards but it may not be true vice versa. So, if you want to use the discounts offered by credit cards, limiting yourself to one card may not be wise.
3. Your second card will provide you back up
In case you lose your credit card or if it is stolen, having a second credit card helps as you don’t have to wait for the replacement card. This is helpful especially when you are traveling. You can keep your second credit card in the locker of your hotel as a backup. So, even if you lose your wallet you have the second card as a backup.
Also, your second credit card can be used as an alternative if your primary card doesn’t work or the swiping machine at the merchant’s shop doesn’t accept it. It is always good to have a backup.
While there are advantages but managing multiple credit cards can be difficult too as you have to remember the debt repayment date for each of them and if you are not a disciplined spender you may end up with a big credit card debt.
How many credit cards you should have?
There is no particular number as to how many credit cards one should have. It will depend on a person’s requirement. Analyse your needs and evaluate the different cards available. However, it is generally advised that you shouldn’t have more than 3-4 credit cards at any given point of time.