A big question that hovers in the minds of people is how many credit cards they should own. Credit cards come with several attractive facilities and that makes it really popular among people who spend a good amount of money on shopping and paying bills every month. Credit cards can be widely used for making payments such as electricity and phone bills. Along with that, almost all credit cards give lucrative offers that can be availed by the credit card holder. High percentage of cashback can also be obtained by making transactions with a credit card at selected vendors and outlets. Thus a credit card makes a person’s life very much easier and shopping becomes extremely convenient.
But with all benefits come drawbacks as well. Credit cards carry high interest rates when a cardholder withdraws money using it or when they transfer previous months’ pending bills. Along with that there are several hidden expenses as well that get shown on the bill if a cardholder is not careful enough. The most potent risk that comes with the use of a credit card is that it may lead to a debt trap if the cardholder spends recklessly.
Now coming to the question that matters the most – how many credit cards should a person own, it totally depends on the way he spends and how much credit limit he needs every month. So the answer to this question would be different for different individuals. For a person who doesn’t spend much money, one credit card is good enough but for a person who has a posh lifestyle, several credit cards might be needed.
There’s a common belief among people that owning more than one credit card carries a high risk but some people suggest that one can own three credit cards to meet their credit needs and that is beneficial rather than risky. Now why the need for more than one credit card? The several answers to this question are:
Increasing the credit limit:
The primary reason for an individual to apply for the second and third credit card is to increase their credit limit. When a person feels that the credit limit which is offered by his present single credit card is not enough then he goes for the second or third credit card so that he gets a higher combined credit limit. But it may be noted that if a credit cardholder maintains a good credit history with his single credit card and pays all his bills on time, the credit card issuing company may increase his credit limit on the present card itself. In this case, there is no need for a second or third card.
Purchasing with ease:
There are certain merchants who do not accept all types of credit cards. That is, they either accept a Visa Credit Card or a MasterCard Credit Card. In these situations it is better to have 2 credit cards of 2 types. Sometimes due to technical glitches some POS terminals might not accept a particular credit card. In that case multiple credit cards would be helpful to make a transaction. Thus multiple credit cards act as a backup when payment fails with a particular card.
Special Benefits and Services:
There are several cards that are made for a specific purpose only. Fuel cards are special cards suitable for people who use their credit cards for purchasing petrol or diesel as these cards give cashback or discounts. For frequent flyers, there are special frequent flyer cards and by using these cards for buying flight tickets, one can earn points in the form of air miles and so on. So the type of special card an individual carries depends on his lifestyle. In this way, a person can have a special card for a particular type of transaction only.
Online Security:
With high amount of credit card frauds and counterfeiting during online transactions, nowadays its better to keep a separate credit card with low credit limit just for online transactions. In this way people could avoid credit card frauds even if the card details are hacked as due to low credit limit the damages incurred wouldn’t be too much.
In order to maintain multiple credit cards at the same time, follow the below mentioned tips:
Keep a note of the billing cycle:
Billing cycle is the last date by which one needs to pay off his credit card bill. Every individual has a different billing cycle based on the date his credit card was issued. When a person is having more than one credit card, he should make all his purchases keeping the billing cycle on mind. In this way he would get added extra time to clear off his bills.
Keep a tab on the rates of interest:
Different credit card companies offer different interest rates. So a person should use his cards accordingly to avail the lowest interest rate being offered.
Annual Charges:
Different credit card companies have different policies regarding their annual charges. While ICICI Bank offers almost all its cards at 0 joining fee, SBI charges a fee of Rs. 499 on some of its cards. But people with a good credit history can negotiate to negate or lower their credit cards’ annual fees. So instead of increasing the number of credit cards owned, one can also manage and optimize their existing cards.
