Is it Okay to Have Multiple Credit Cards? Pros and Cons

Using a credit card is like taking short-term interest-free loans. But what if you miss the repayment deadline? What if the hefty interest starts piling up? What if your credit score drops? You have been constantly surrounded by various questions, especially where credit cards are concerned.  

 Managing a credit card well allows you to benefit from multiple rewards and cashback. It can also be a life-saving float when you are drowning in the unexpected currents of expenses. Let’s take an informed decision by understanding more about owning multiple credit cards.  

Pros of Owning Multiple Credit Cards

1. Build a Better Credit Score

However, with the incessant hike in the prices of daily commodities, it becomes essential to utilise financial tools like credit cards. With just one card, you cannot shield the blows on your wallet. This is because of the restrictions placed on your spending in the form of a credit limit. Suppose you own one credit card and end up utilising about ₹90,000 of its ₹1 Lakh limit. This means that you have used 90% of your card’s credit limit. Hence, your credit utilisation ratio (CUR) drops. Owning multiple cards can be beneficial in this case.  

Let’s assume you bought another credit card and continue using the same amount using both cards instead of one. Thus, you end up using only 50% of the credit limit on both cards with ₹45,000 spent on each. With this, you can manage your CUR better. Maintaining a good CUR is vital for improving your credit score and is therefore, extremely important.
Speaking of credit scores, did you know that using a credit card effectively can help improve your credit score to a great extent over time? Properly managing multiple such cards increases your credit score exponentially, indicating that you can handle debt well. A good credit score helps you get a loan from providers at better interest rates.  

2. More Cards Means More Benefits

You must have put in a lot of time and effort when selecting the credit card which is perfect for you. The choice can be difficult, considering the wide array of options available to you. But what if you could have it all? Relax; you don’t have to own all the credit cards in the world. Instead, holding at least one credit card from specific segments like airlines, banking, shopping, etc, is more beneficial. Various cards offer you many benefits which make them more unique.  

Some cards may offer complementary lounge access or free movie tickets. Having one card from each industry can give you access to a wide array of offers and rewards. Owning multiple cards provide you with many such deals. You can earn reward points with every expense you make using a credit card. Accumulating these points can get you additional deals. So, owning more cards can open the doors to a plethora of benefits!  

3. Longer Interest-free periods

If the billing cycles of your cards are different, you can enjoy longer interest-free periods with the help of multiple credit cards. All cards have a fixed repayment period which is interest free. However, these vary from card to card. So, juggling your payments between cards can help you prolong your interest free periods, allowing you to enjoy the benefits of a credit card for longer. 

Cons of Owning Multiple Credit Cards 

1. Difficult to Manage

Managing multiple cards may bring you a host of advantages and perks. However, it is equally difficult to keep in mind the varying interest rates, billing dates, and so on. Missing deadlines can lead to an increased credit bill which might become stressful to repay. Managing multiple hefty bills can strain your finances and force you to shell out money from your savings. A similar difficulty will follow at the time of renewal and expiry of each card. Hence, you must maintain a track of your credit cards separately and avoid a complicated financial life.

2. Heightened Debt Risk

As mentioned above, you can quite easily miss out on your repayment date. With this comes multiple liabilities that you will be held accountable for. The possibility of debt piling up increases as the number of your cards increases. Do not opt for a second credit card unless you are absolutely sure about your organisational and managerial skills. Don’t consider multiple cards as an opportunity to spend more and instead utilise the funds at your disposal more responsibly! 

3. Score Drops with Every New Card

Applying for a new credit card results in a ‘hard enquiry’, leading to a drop in your credit score. While managing and maintaining a credit card will help you build your score once again, the initial application can hurt your score. Thus, it is important to remember not to apply for multiple cards at once, as this can hamper your credit score greatly. Instead, what you can do is span out your applications over a period of time and ensure to implement ways for recovering the lost points.  

Whether you want to get a second credit card or not is entirely up to you. As per the pros and cons we have learnt about today, take the decision that is in your best interest. Keep an open mind and consider if you actually need multiple credit cards. Evaluate your option well before approving or rejecting them.  If you are sure about this and want to look for a card that has multiple rewards to offer, find it here on Bajaj Markets! Choose from the multiple card providers by analysing and comparing. Apply for your new card with the easy digitised application process and enjoy the benefits of your new card!