Now a days, having more than on credit card is quite common for all to maximise their spendings. But, there is a noticeable point that too many credit cards mean too many options to borrow money, which may lead to unmanageable debt.
Positive approach – having multiple credit cards?
Maximises reward points:
Most of the credit card reward programmes are aimed at specific type of transactions. Using the right credit card for specific transactions can maximise reward points for you.
Overcomes limit on reward points:
Many credit cards impose a cap on total reward points that can be credited in a particular billing cycle. Having another card will allow you to continue making purchases.
No worry in case of theft or loss of a card:
It takes at least three or more working days to receive a replacement card in case of loss or theft of the original credit card. Having two or more credit cards will ensure that you don’t have to compromise on your monetary requirements.
Chance to improves your credit score:
Having multiple credit cards can improve your credit score by lowering your credit-utilisation ratio. This ratio is the proportion of your total debt against your total credit limit. Lower credit utilisation means that you are less credit hungry and hence, less likely to default, which in turn increases your credit score.
You can enjoy Interest free debt:
Interest free period is the difference between the date of credit card transaction and due date of payment for that billing cycle. Purchases made during the initial days of the billing cycle enjoys more interest free days vis-à-vis the ones made towards the end of the cycle. Having two or more cards with their due dates spread across the month allows you to make the most of interest free period.
Negative approach – having multiple credit cards?
Difficult to manage:
Multiple credit cards mean multiple bills and due dates. People having difficulties in keeping a track of the bill schedule may end up missing repayments which can lead to late payment fees and interest on outstanding bill. To avoid such situations, you can opt for auto-pay option wherein the due amount will get automatically deducted from your savings account.
Possibility of increased spending:
With too many credit cards in their hand, people lacking financial discipline often end up overspending. This can reflect poorly on your credit score, in case you fail to make timely payment.
Effect on credit score:
As each new credit application or enquiry brings down your credit score, applying for too many credit cards within a short period of time can temporarily lower your credit score.
There is no harm in availing multiple credit cards if you are financially disciplined and can take care of multiple bills and their due dates. Make sure that you are well awared about the reward points and credit limit on each of your cards.
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