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Should you have more than one credit card?


If you are someone who usually has large outstanding payments on your credit card and are paying interest and penalties, then the answer is no. But for most of others with good fiscal discipline, then the answer is yes, as there are various advantages of having more than one credit cards.


Different Cards, Different Benefits

One key reason for using a credit cards is the benefits associated with using credit cards. Most common benefits associated with the cards are:

  • Reward Points earned on every spend which can be redeemed for goodies

  • Free Movie tickets

  • Fuel Surcharge waiver

  • Airport Lounge access

  • Insurance (Travel/Accident etc.)

  • Special discount offers by leading stores (online as well as in-store)

  • Dining discounts

Not all cards have all these benefits. For example, some card may offer you 3 free Airport lounge access per year while another offers you 5 free Airport lounge access per year. Some cards might offer you accelerated reward points when you spend on groceries while other cards might offer you accelerated reward points when you spend on Travel. Some cards give you 2% surcharge waiver on petrol pumps while others offer 1% and still others offer none. Hence having more than one credit card, each of different type can help you get maximum benefits such that the features from each card helps fill the benefit gap from the other. For example, if you travel very often and commute by road often, you could keep one card that has a good free airport lounge coverage while the other card has a fuel surcharge waiver benefit.


The challenge is that, most people can’t remember the benefits on your credit cards and hence are unable to make best use of its features. For example, 7 out of 10 people who have credit cards have free domestic airport lounge access but are unaware of this benefit and hence are unable to leverage it. 8 out of 10 people who have credit cards with fuel surcharge waiver tend to use the wrong card at petrol pumps because they are either unaware of this feature or can’t recollect benefits on their cards. RUSSH App (www.russh.in) helps address these gaps so that the user has access to benefits of all cards at the user’s finger tips. RUSSH app is safe as it does not ask for card details.


Credit Score Influence

Your Credit Score is an important factor that determines your ability to avail credit or loans from any financial institution. By having more than one credit card, and paying the outstanding on time, it can actually help improve your credit score by making it easier to keep your debt utilization ratio low. This is an added benefit of having multiple credit cards.

If you consume most of the credit limit on your credit card often, it slowly starts adversely influencing your credit score. You may feel this is unjust, but that is how the system works. If you want to improve your credit score, most credit experts recommend that you avoid using more than 30% of your available credit per card at any given time (while one-off exceptions in a year is ok). So having two or more credit cards and splitting your spend between the them can help maintain low debt utilization ratio helping improve your better credit score.

Emergency Use

Let us say you are travelling abroad and for some reason one of your cards or the network associated with that card does not work. That's when a second card can come to your rescue. There is an unplanned medical emergency and you are required to pay a large chunk of money as pre-hospitalization fee where the credit limit on one of your cards may not be sufficient to pay the fee. This is where the second card can come in handy.


Backup Use

There are situations where a particular bank’s network maybe down. In such scenarios it is best to have a backup card which is from another bank so that the purchase can be made. Similarly, sometimes the entire VISA, MASTERCARD or AMEX network maybe down. Having cards from different networks can also help then.


Bottom-Line

There are significant advantages of using multiple credit cards if you can manage them responsibly. While going for multiple credit cards one must understand their benefits and select cards whose benefits complement each other. It is also recommended you subscribe to cards from different banks and networks as opposed to cards from the same bank since there are festive offers that vary from bank to bank. That said, if you have multiple cards ensure that you track their respective payment due dates and make the payment on time.

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