In these modern times, credit cards are a staple in every individual’s wallet. After all, this is the era of digital payments and cashless transactions taking place in nanoseconds. Whether you’re grabbing a coffee on the go, are out on a dinner date with your better half or simply enjoying a shopping spree alongside a lovely companion; credit cards are always there to the rescue and there’s a chance of getting cashback & rewards on your purchases too.
The most important thing is knowing how many of these plastic cards you require in your wallet. Some financial experts insist that carrying a single credit card is more than enough. In this post, we will walk you through the benefits and risks of owning multiple credit cards.
Tip: There’s no one-size-fits-all approach applicable to owning credit cards. At the end of the day, it all comes down to an individual’s ability to manage his/her credit bills responsibly while keeping up with the due dates.
More Cards, More Benefits
Credit card issuers constantly keep on attracting consumers with fascinating perks and cashbacks. That’s what keeps the customers coming their way. You might be tempted to opt for more than one credit card. You could keep one for personal spending and the other for business spending. It will help you keep the finances separate.
Moreover, you can also opt for a card that offers rewards on groceries, another that offers enticing cashback or reward on dining and another that lets you place orders on international websites without charging any hefty foreign transaction fees.
Having different credit cards allows you to earn rewards and cashbacks on every purchase made using a credit card. For instance, you can easily earn up to 5% cashback on groceries, hotels, fuel and dine-outs. Some cards offer FLAT 1% cashback on all purchases made using them.
The only downside is that if you have too many credit cards, you may end up forgetting a due date or even lose one of the cards. One wrong move and you’ll ruin any savings earned.
Sometimes, having even two credit cards could be troublesome for those who can’t afford to pay off their bills or are weak at practising self-control.
Risk: You might end up in a debt trap
Financial experts fear that credit card users might rack up huge bills and expenses. Well, we strongly believe that it’s nothing other than a myth. If you’re owning multiple credit cards, you’ll be way better at managing your expenses. You’ve to be disciplined enough to realise when you’re overspending or else you’ll end up in the debt trap. Don’t go overboard by creating debt that you can’t afford to pay.
Benefit: Helps secure loans with minimal interest rates
If the credit cards are being used wisely, they’re known to strengthen your stance in the credit score range and later you can secure loans with nominal interest rates. On the other hand, if you fail to manage it responsibly the stakes are pretty high and may turn you ineligible for future lending.
Benefit: Get rewarded on your spendings
Isn’t it tempting to get rewarded for doing your monthly groceries? It certainly is! Many credit cards offer cash backs, rewards, incentives and promotions at certain brands they’ve partnered with, which is a great thing for any shopaholic.
Benefit: Buy now, pay later
The best thing about paying through a credit card is that you don’t get billed right away. There’s no need to worry if you’re roaming around cashless because these plastic cards have you covered.
It is quite convenient to use a credit card for your purchase, as it will let you get hold of the product/service instantly and not get billed for it until your payday rolls around.
Risk: Losing the track of due dates
This is pretty common when you own multiple credit cards. Being diligent and responsible enough is the key to maintaining a good credit score. The best way to keep up with the due dates is by setting up reminders.
No matter how many credit cards you own, it is suggested to carry not more than two at a time. You’ll still have a backup card in case your primary card is declined due to any XYZ reason. It also minimizes the risk of losing all your cards if your wallet goes missing.
If you’re one of those impulsive individuals that easily draw themselves into a huge pile of debt, then you shouldn’t sign up for a credit card at all! Also, you should consider reading these five useful tips that will help you limit your overspending habit.
Risk: Frauds & scams
Ever imagined having your credit card being suspected of potentially fraudulent activity? In such a scenario, your card will be frozen until you assure your credit card company on call that you are on a vacation in Egypt and the card is with you. This pretty much justifies the need to carry a backup credit card.
Sometimes, your credit card details might be compromised if you’re a victim of phishing. Unfortunately, there’s no fool-proof way of avoiding such scam attempts. Because of such unavoidable circumstances, it’s always a good idea to own at least two or three credit cards.
A credit card is undoubtedly a lifesaver when you are caught up in an emergency. To cope up with an unexpected emergency whether it is paying off a medical bill, losing your job or covering a car repair; credit cards can be quite useful in such testing times. Ideally, your credit card should have zero annual fees and a reasonable credit limit with the best & minimal interest rate.
Having several credit cards comes up with the responsibility of managing credit card limits on each and paying their balances before due dates.