Benefits of Having Multiple Credit Cards

According to national credit bureau Experian, credit cards are widely utilized in the United States, with 61 percent of Americans owning at least one card, and the average borrower possessing four. While having multiple credit cards may initially seem unnecessary, there are several potential advantages to consider. Depending on individual finances, goals, and preferences, here are some compelling reasons to explore the benefits of holding multiple credit cards.

1. Credit Card Rewards: Many credit cards offer rewards programs in the form of cash back, points, or miles. However, a single card may not provide high rewards rates for all spending categories. By using two or more cards strategically, individuals can optimize their rewards earnings. For instance, one card may offer significant rewards for grocery store purchases, while another may provide better rewards for fuel expenses.
2. Increased Credit Limit: Credit limits are influenced by various factors, such as credit history, income, and existing debts. Having only one card with a low credit limit can lead to regular utilization near the limit, potentially affecting one’s credit score. By spreading purchases across multiple cards, individuals can maintain lower balances and avoid reaching their credit limits. Additionally, holding multiple cards can provide a safety net in case of a financial emergency.
3. Improved Credit Score: Demonstrating the ability to manage multiple credit accounts responsibly can positively impact credit scores. Paying credit card bills on time and in full each month helps build a strong credit history. By maintaining timely payments across multiple cards, individuals can further enhance their credit scores.
4. Backup Payment Method: While credit card declines are uncommon, having a backup card can prove invaluable in situations where a transaction is unexpectedly declined. This is particularly important when traveling, as a declined card can leave individuals stranded. Carrying an additional credit card ensures a higher chance of successfully completing transactions, providing peace of mind.

When selecting credit cards, several factors should be considered. It is advisable to check one’s credit score before applying, ensuring eligibility for preferred cards. Understanding personal spending habits is crucial, as rewards cards offer varying rates for different categories. Preferences, such as interest rates, benefits beyond rewards, and specific card features, should also be taken into account during the selection process.

To utilize credit cards responsibly, individuals should strive to pay their balances in full each month to avoid accruing interest charges. Setting up automatic bill payments can help maintain timely payments. Additionally, adhering to a budget is essential to control spending and prevent credit card debt. Lastly, cash advances on credit cards should be avoided whenever possible, as they often incur high fees and immediate interest charges.

With thousands of credit cards available in the market, researching and comparing options can be overwhelming. Platforms like Credible offer online tools to assist individuals in finding suitable credit cards based on their specific needs and preferences.

By understanding the potential benefits and exercising responsible credit card usage, individuals can make the most of their financial resources while effectively managing their credit and enjoying various rewards programs.