In this electronic age, one cannot imagine moving around without a couple of smart plastics in one’s pocket. Credit cards are secure, empowering and convenient. With a huge array of cards available in the market, it can be difficult to just choose one of them. But are you equipped to handle multiple cards?
Many Credit Cards – Arguments In favour
Credit cards are liberating. They ease out payments, easy to carry around and are a lot safer than cash in your pocket. Some more food for thought:
- The market offers a gamut of credit cards and all have different features & benefits. While some cards come with discounts on dine outs and entertainment, others offer travel miles that help redeem in exchange for flight tickets. Some co branded cards offer a waiver on fuel surcharge while others offer loyalty points that can be exchanged for home appliances and other gift items. In essence, different cards fulfil different needs and all are equally attractive.
Having different cards for different purposes also helps keep track of your spending. For example, using one card for online purchases, while another for fuel and a third for ticketing aids easy management of expenses.
- Assuming a card is lost or stolen and you are in an emergency, then the second card will come in handy until the lost card is replaced. In another scenario, a card does not work due to technical faults and you hadn’t planned on it so you don’t have enough cash. At such a time you might feel suspended in the middle of nowhere if you have only one card to depend upon. Don’t let your plans be stalled due to lack of pre-planning. A second card always works as Plan B.
- We all know credit cards are accepted worldwide. But not all cards are accepted in all countries. If you frequently travel abroad then having a mosaic of American express, MasterCard and Visa works in your favour.
- Supposing you plan on making a high value purchase using your card. But the credit limit is not enough. Having multiple cards means additional credit which translates into higher purchasing power. When you have maxed out a card limit and still have purchases to make, having a second card comes to your rescue as expenses can be split among multiple cards.
- Several credit cards offer to convert high value purchases into EMIs. For example, you have purchased a new phone using your credit card for Rs. 30,000/-. You can convert this amount and repay in six or twelve monthly instalments. This way, you avoid burdening your budget in any single month.
- Credit cards can be useful in consolidating smaller debts into one. Using the balance transfer facility on credit cards, one can transfer outstanding balance on another card to the one asking for a lower rate.
Many Credit Cards – Arguments Against
It can be easy to go overboard with something as addictive as credit cards. You get such a kick out of the monetary leverage they provide that sometimes you may not realise when to stop.
- Having too many cards has a two-fold impact on your credit score. More cards mean higher credit limit. This increases the total available credit limit in your credit report. It spells into a low utilization ratio and in effect your score ascends. Infact, credit cards are usually the first line of credit people indulge in. Thus, still having the oldest card with you helps your credit score. On the flip side, too many open accounts mean higher liability. It also means too many inquiries into your report. This causes your score to decline.
- It is easy to spiral into credit card debt. If not handled prudently, you can soon find yourself under surmounting debt pile. The prospect of “spending today, paying later” tends to go out of hand. Since no real money exchanges hands, so it is easy to lose track of expenses. Often people overspend their budget. Sometimes, people forget that credit used needs to be repaid. Unless, one can stay on top of all the bills, one should limit use of credit cards.
- Managing credit card debt can cause anxiety if not streamlined. It has been noticed that people who carry a number of cards in their wallet, get confused between payment due dates, amounts to be repaid, credit limit, pin numbers etc. This leads to mismanagement of payments and sometimes unintentionally payments are forgotten or delayed, which can take a toll on your score.
- More cards means you are more prone to losing a card and more vulnerable of becoming a victim of identity theft. With many cards, people become slightly careless. Often people don’t even realise they have lost a card till they receive a transaction alert or statement in the mail.
- With more cards come higher additional costs in terms of annual fees, overdue penalties and other service charges.
A Few Last Words
Looking for a credit card, apply online. But be careful on how many you want to apply for. Your credit report is inquired into every time you apply for a credit score. There are many benefits to having several credit cards, but only if you know the right way to handle them. Since there is no real “cash flying out of the wallet”, it becomes easier to lose focus and go overboard on your budget. That is the last thing you want to do.
Is there an ideal number of cards you must carry in your wallet? Well, no. It is all about striking a balance between your preferences and expectations of your card and the number of cards that will suffice them. Managing your “quiver full of cards” tests your financial prowess.
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