Credit cards can be very advantageous in terms of rewards and benefits if used wisely. Carrying a credit card is still safe than carrying cash as they are loaded with a lot of security features. Having a credit card and using it sensibly for a long time can have you awestruck with its rewards and benefits. Once you get a hold of a credit card the next question that arises is whether you should get an additional credit card or not.
By this time your requirements and spending habits would possibly change and to fulfill them you will require another credit card. This is just one perspective, you can also get an additional credit card for other reasons like increasing credit limit, availing of low-interest rates, and so on.
Whatever may be your reason, you must get your facts clear why you need another credit card and how it will be beneficial to you. In this article, we have focused on the pros and cons of having an additional credit card that you must know. Keep reading to kick start your research.
Pros of having an Additional Credit Card:
- Build credit score: Having another credit card helps in building a good credit score. You can use two credit cards to give a boost to your credit score but this is only possible when you keep your credit card dues on both cards clear timely.
- Credit limit enhancement: The advantage of having one more credit card is that you get an enhanced credit limit which means you get more funds to spend to fulfill your requirements in times of cash crunch.
- More rewards and benefits: Another upside point that you get to enjoy is that you get more diverse opportunities to earn rewards and benefits on your credit card.
- Balance transfer facility: Having two credit cards allows you to enjoy the balance transfer facility. In case you won’t be able to pay one credit card’s outstanding amount within the grace period, you can transfer that amount to another credit card that has a longer grace period this allows the financial room to breathe.
- Increased credit utilization ratio: Having two credit cards or more provides a higher credit utilization ratio. If you use 30% of your credit limit on one credit card, having another credit card allows you to increase this limit to 60% as will be able to use 30% of the credit limit on both credit cards.
Cons of having an Additional Credit Card:
- Memorizing due dates: One of the biggest disadvantages of having more credit cards is that you are required to remember due dates on all credit cards which is not possible. Missing due dates can add you to the defaulters’ list.
- Impact on credit score: If you do not use your credit cards responsibly then it can drastically impact your credit score. Instead of improving the credit score, it can get affected negatively.
- Chances of debt spiral: Having more unsecured debt can increase the chances of you lending up in a debt spiral. Not paying the credit card dues timely is one way that increases your debt. This is another downfall of having more credit cards which you need to keep in mind.
Reasons to get an Additional Credit Card:
- To avail of a low-interest credit card: One reason why to get another credit card is that if you already have a credit card that has higher interest charges, then go for a credit card that has fewer interest charges. This helps in cutting down your cost.
- To improve your credit score: Getting another credit card should be considered when you need to improve your credit score. This is a great way to build or improve a good credit score.
- To enjoy more benefits and features: With more credit cards you get to enjoy more features and benefits. This way you make the most out of your credit cards and get a rewarding experience. You can go for the best credit cards in India that offer more benefits and features.
- To fit in with your changing spending habits: As time passes by, your needs and spending habits change, to fit with them you need to have another credit card that compliments them and helps you save a lot.
- To get a higher credit limit: One of the main reasons for having another credit card is that you get a higher credit limit. You get more funds to utilize, but you need to use them wisely so that you don’t end up in a debt spiral.
To conclude, having additional credit cards can be of advantage only if you know how to use them wisely. Another credit card should only be availed of after analyzing all the factors carefully. If they will help you save more and earn more benefits and rewards then you should definitely go for another credit card. If not, then you should avoid it as they can prove to be pretty burdensome in terms of cost if not used wisely.