Multiple Credit Cards: Should you own them and how to manage effectively | Mint

In India, all banks together offer 100s of different credit cards. Each card has its own unique selling point (USP). For many people, one single credit card cannot cater to all their needs. Hence, they follow a multi-credit card strategy to maximise the benefits. In this article, we will understand why people own multiple credit cards, their benefits and how to manage them.

Why do people own multiple credit cards?

As mentioned earlier, for many people, one single credit card cannot cater to all their needs. Some of the reasons why some people own multiple credit cards and their benefits include the following.

Discounts and cashbacks

Some people prefer instant discounts on credit cards, whereas some prefer cashback. For example, ICICI Bank regularly rolls out credit card instant discounts on marketplaces like Amazon and other category-specific online and offline merchants. So, people who prefer instant discounts, may find it useful to keep an ICICI Bank credit card.

A segment of people prefers cashbacks as a benefit on credit card usage. These people may find it useful to keep a cashback credit card in their wallet. For example, the Cashback SBI Card offers a 5% cashback on all eligible online spends. The maximum cashback is limited to Rs. 5,000 in a billing cycle. It is one of the most popular credit cards in the cashback segment.

Some credit cards give cashback on spends in specific categories. For example, the HSBC Live+ Credit Card gives 10% cashback on all dining, food delivery, and grocery spends, subject to a maximum of Rs. 1,000 cashback per billing cycle.

The third type of cashback credit card gives cashback for transactions done with specific partners. For example, the Amazon Pay ICICI Credit Card, the Flipkart Axis Bank Credit Card, Tata Neu Infinity HDFC Bank Credit Card, etc. These credit cards give up to 5% cashback for transactions done with specific brand partners.

Depending on the requirement, an individual can choose from a generic cashback card, category-specific card, or brand-specific card in the cashback category.

Reward points transfer partners

The credit card reward points offered by most banks are versatile and can be used for multiple purposes. One of the benefits of reward points is converting them into airmiles by transferring them to airline frequent flyer programs (FFP). Apart from FFPs, reward points can be converted into hotel loyalty points by transferring them to hotel loyalty programs.

These days, many individuals prefer to convert credit card reward points into airmiles and use them for booking free flights. Some individuals prefer to convert reward points into hotel loyalty points and use them for booking free hotel accommodation.

For example, Axis Bank has one of the highest transfer partners for converting credit card reward points. The frequent flyer program (FFP) transfer partners include:

1. Air Canada (Aeroplan)
2. Ethiopian Airlines
3. Etihad (Etihad Guest)
4. Japan Airlines (JAL Mileage Bank)
5. Qatar Airways
6. Singapore Airlines (KrisFlyer)
7. Turkish Airlines
8. Thai Airways (Royal Orchid Plus)
9. United Airlines (MileagePlus)
10. Air France – KLM (Flying Blue)
11. Maharaja Club
12. Air Asia
13. Qantas Airways (Qantas Frequent Flyer) and
14. SpiceJet

The hotel loyalty transfer partners include:

1. Accor Hotels (Accor Live Limitless)
2. Marriott International (Marriott Bonvoy)
3. Wyndham Hotels (Wyndham Rewards)
4. IHG Hotels & Rewards (IHG One Rewards) and
5. ITC (Club ITC)

People who prefer converting credit card reward points into airmiles and hotel loyalty points may consider credit cards from Axis Bank, HDFC Bank, American Express, etc. These banks have tie-ups with various transfer partners to facilitate the conversion of credit card reward points into airmiles and hotel loyalty points.

Complimentary memberships

Some credit cards offer complimentary membership(s) that provide a lot of value. For example, the Marriott Bonvoy HDFC Bank Credit Card provides complimentary Marriott Bonvoy Silver Elite Status. The card offers a credit of ten elite nights. These benefits are provided every year on the payment of annual fees.

Marriott Bonvoy loyalists will find the credit card useful. The complimentary Marriott Bonvoy Silver Elite Status and 10 elite nights help the Marriott Bonvoy member to progress faster to the next level, i.e. Gold Elite Status. The HSBC Taj Credit Card provides NuePass Taj Innercircle Platinum Tier membership. Similarly, there are other credit cards that provide complimentary memberships through tie-ups with various partners. Individuals who find value in such complimentary memberships may consider these credit cards.

Category-specific benefits

In the last few years, the UPI mode of payment has become quite popular. With growing UPI popularity, credit cards that offer benefits on UPI payments are also gaining popularity. In this category, the Tata Neu Infinity HDFC Bank Credit Card offers a 1.5% value back in the form of Neu Coins on UPI payments made using the Tata Neu UPI ID. Similarly, some other Rupay credit cards offer up to 2% rewards on UPI payments. If you make a lot of UPI payments, you may consider a credit card that offers good rewards on UPI payments.

Similarly, there are some credit cards that offer benefits for spending in specific categories. Some examples include the following.

1. The RBL Bank Play Credit Card offers two free movie tickets every month. Movie buffs can consider this card.
2. The Airtel Axis Bank Credit Card offers up to 25% cashback on Airtel services and up to 10% cashback on gas and electricity bill payments. Individuals spending high amounts on Airtel services every month can consider this card.
3. The American Express Platinum Travel Credit Card, the Axis Bank Atlas Credit Card, etc., offer various travel-centric benefits. Nomads can consider one of these cards.

Similarly, there are credit cards that give benefits on spending on categories like food delivery, dining out, grocery, fashion, etc. So, if you have high spending in a specific category, you may analyse credit cards offering benefits for spends in that category and consider one that suits your needs.

Strategy to manage multiple credit cards

We have discussed why people keep multiple credit cards and how they can enjoy their benefits. Let us now discuss how one can manage multiple credit cards. To maximise the benefits of credit cards, an individual may keep up to 3-4 credit cards. Beyond that, it may require you to spend time and effort to manage them.

Even when you keep up to 3-4 credit cards, you should have a clear strategy in your mind for their usage. It includes which card to use, when, where, how much, how to use the reward points, etc. When you are clear on this strategy in your mind, the usage of cards becomes smooth. You should not be in a situation where you have to stop to think about which credit card to use before every transaction.

An important part of the multiple credit card management strategy is the timely payment of monthly bills. You may automate the bill payments through auto-debit. The auto-debit date should be kept at least 5 days before the due date. If the payment is going through a third-party payment processor, it may take up to 3 days to reach your credit card bank. There may be public holidays in between, for which you should keep a buffer.

If you make payments manually, keep track of the bill generation date and the payment due date. Make the payment at least 5 days before the due date for the reasons mentioned above.

Check the monthly statements regularly to monitor any unauthorised spends or unrecognised charges. Having multiple credit cards will give you a higher overall credit limit. There can be a temptation to overspend. Hence, when using multiple credit cards, make sure you use them responsibly for need-based spends only. Also, the bill payments must be made before or by the due date to avoid any finance charges and monthly interest charges (usually 3 to 3.75%).

Should you follow the multiple credit card strategy?

If you use credit cards mainly for instant discounts and/or cashback, then 1-2 credit cards may meet most of your requirements. Managing 1-2 credit cards will be easy. If you use credit cards for maximising reward points, lounge benefits and other benefits along with instant discounts, then you may need up to 3-4 credit cards. 

If you are new to credit cards, you may start with 1-2 credit cards. Once you get comfortable with them, you may consider adding more credit cards to your portfolio based on your needs. A diversified portfolio of 3-4 credit cards can help you maximise their benefits.

Gopal Gidwani is a freelance personal finance content writer with 15+ years of experience. He can be reached at LinkedIn.