The Benefits of Having Multiple Credit Cards

Credit cards serve as a revolving credit option that enables individuals to make everyday purchases. According to Experian, a national credit bureau, 61 percent of Americans possess a credit card, with an average of four cards per borrower.

While it may not appear necessary to have multiple cards, there are numerous potential benefits associated with owning multiple credit cards. Depending on one’s financial situation, goals, and personal preferences, the following reasons provide insight into the advantages of having multiple cards:

1. Credit card rewards

While not all credit cards offer rewards, many provide cash back, points, or miles as incentives. However, a single credit card may not offer high rewards rates for significant spending categories. Consequently, utilizing two or more cards in conjunction can maximize benefits and provide greater value for one’s spending.

Credit card companies offer various rewards programs and benefits that individuals may not be aware of. For those interested in obtaining a rewards credit card to take advantage of these perks, Credible’s free online tool allows for easy comparison of currently available cards.

For instance, if a substantial amount is spent on groceries, having a card with a high rewards rate specifically for grocery store purchases can be beneficial. Similarly, obtaining another card with a high rewards rate for fuel expenses can help maximize rewards in that category.

2. Increased credit limit

Credit limits are determined by several factors, including credit history, income, existing debts, and the issuing financial institution. If an individual possesses a card with a low credit limit, consistently approaching the limit each month can negatively impact their credit.

However, obtaining a second or third credit card enables the distribution of purchases across multiple cards, maintaining lower balances. Additionally, having multiple cards can provide a potential financial safety net during emergencies. Consumers can compare their current credit cards, rewards, and benefits with other options using Credible.

3. Improved credit score

Owning multiple credit cards can contribute to an improved credit score by demonstrating one’s ability to manage multiple credit accounts simultaneously. As long as monthly bills are paid on time, preferably in full to avoid interest charges, individuals will experience the benefits of a higher credit score.

4. A Reliable Backup Payment Method

Title: A Reliable Backup Payment Method

In rare cases where your credit card is declined, having a backup credit card can provide a solution to unexpected situations.

This is particularly crucial while traveling. Whether you are within the United States or exploring foreign destinations, encountering a declined credit card at a hotel, gas station, or any other establishment could potentially leave you stranded. However, by having more than one card in your possession, you significantly increase the likelihood of successfully completing the transaction.

How to Choose the Appropriate Credit Cards

With the vast array of credit cards available in the United States, the task of finding the most suitable one can be overwhelming. Here are some key factors to consider during your research:

1. Assess Your Credit Score: Before applying, check your credit score and contact the lender to gauge your chances of qualifying. This preliminary evaluation can help you make an informed decision before submitting your application.
2. Understand Your Spending Habits: Different rewards credit cards offer varying rewards rates. Ensure that the benefits of the card align with your everyday spending patterns to maximize your rewards potential.
3. Consider Your Preferences: Credit cards come in various types, such as zero-interest cards, hotel cards, student cards, and more. Additionally, credit cards offer a range of features beyond rewards. When comparing options, determine which features are most important to you and select the card that best suits your needs and goals. Visit Credible to compare some of the best credit cards available.

Practicing Responsible Credit Card Usage

If you opt to have multiple credit cards, it is crucial to employ responsible usage practices. Follow these steps to ensure responsible credit card management:

1. Avoid Carrying Balances: To prevent incurring high interest charges, strive to pay your balances in full by the due date every month. Credit cards often impose annual percentage rates (APRs) in the double digits, some reaching over 20 percent. Setting up automatic full-balance payments is an effective way to ensure timely and interest-free payment.
2. Maintain a Budget: Establishing and adhering to a budget enables you to track your expenses and have a clear understanding of your available funds. This practice helps you avoid overspending and accumulating credit card debt.
3. Minimize Cash Advances: It is advisable to refrain from using credit cards for cash advances. Although these transactions provide quick access to cash, they typically entail additional fees and immediate interest charges without the grace period offered for regular purchases.