Is it smart to have more than one credit card? Weighing the pros and cons | Mint
Source: Live Mint
Keeping a credit card in contemporary times is more of a norm than an exception. For instance, if you have a card that has a credit limit of ₹5 lakh, you can use the same for buying merchandise and for making payments equivalent to this amount.
Usually, card users do not use the entire card limit for obvious reasons. They do not rely on their card for all their expenses, and may defer their immediate expenses to the following month after the current bill is cleared. Nevertheless, it is not uncommon any more for the card users to keep more than one credit card as well.
What is the purpose of keeping more than one credit card, then? Let us understand this in detail.
Advantages of keeping more than one credit card
1. Rolling over of credit period: A credit card has 45 days of interest free credit cycle. When you keep more than one credit card, you can use both for the credit rollover. This means one credit card’s bill can be paid by the other, thereby pushing the credit cycle by another 45 days.
2. Capitalising on benefits and rewards: Sometimes you already carry a card that you got from your bank. And then there could be another offer from the same or another bank for another credit card which has some tempting cashback or reward offers.
There is no harm in keeping another credit card so long as it leads to saving money.
3. Discounts on frequent purchases: There are some credit cards which offer considerable discounts on common purchases such as movie tickets and hotel bookings. If you are a frequent travellers or movie goer, you can get an additional credit card and make the most of these discounts.
However, it needs to be seen through the right lens. There are some disadvantages as well
Key disadvantages of more than one credit card
1. Additional annual fee: When you get more than one credit card, you stand to pay additional fee towards annual charges. So, it is important to note that the additional benefits come at the expense of the annual fee.
2. Too much of liability: When you have a credit card with a limit of ₹5 lakh then your overall limit would stay under ₹5 lakh. But when you get two cards with ₹5 lakh, you may accrue a total liability of around 8-10 lakh. So, one should be cautious of not falling into a debt trap.
3. Missing out on financial discipline: When you keep more than one credit card, you have to keep track of more than one deadline (s) and credit cycle. When there are three or more credit cards, some users forget to pay the bill unknowingly. Sometimes, it is better to keep things simple and more organised.
(Note: Using a credit card carries its own set of risks)
