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Not sure if having multiple credit cards is a good idea? Learn about the little-known perks of having more than one card in your wallet. [[{“value”:”
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It’s normal to be a bit wary about carrying multiple credit cards. More cards means more responsibility, and it puts you at more risk of missing a payment or going into debt.
Lots of people don’t see the value in getting more than one credit card, outside of having a backup in case your first one gets declined for any reason. But that’s far from the only benefit. Here are a few perks of having multiple credit cards that you may not have known about.
1. It could help you save money
Credit cards are more than just a convenient way to pay for purchases. They can also save you quite a bit of money from the rewards and bonuses they offer.
Many cards earn either cash back or points when you use them. There are also cards that have sign-up bonuses — introductory offers for new cardholders. For example, some cash back cards offer a $200 bonus after you spend $500 in the first three months. Open one of these cards, use it to pay a few grocery bills, and you earn $200 back.
Using a rewards card is an easy way to save money if you pay the bill in full every month to avoid interest charges. And you could save even more with multiple rewards cards. Instead of a single $200 bonus, maybe you could earn two of them, for $400 in total savings.
To give you another example, you could get a card that earns 2% back on all your purchases. Or you could get one that earns 6% at supermarkets. An even better option is to get both, so you earn 6% at supermarkets and 2% everywhere else.
2. It could be good for your credit
Your credit history and credit score are important parts of your financial health. It’s generally considered better for your credit if you have multiple lines of credit that you’ve managed well, rather than just one.
There are a couple of reasons why. One of the main factors in your credit score is your credit utilization, or how much of your credit you use. If you have just one card with a $5,000 balance and a $10,000 limit, you’ll have 50% credit utilization. If you have a second card with a $0 balance and a $10,000 limit, you’ll have 25% credit utilization, which is much better.
It also shows that you’re able to manage multiple credit accounts, which looks good to lenders. Some credit card companies are known for denying applicants who only have one credit card, even if they have high credit scores.
3. You won’t be reliant on just one card issuer
I regularly read posts on credit card forums. I’ve seen plenty of horror stories from people who have had problems with their credit card issuers.
Let’s say you do something that trips up your card issuer’s fraud detection, and your card gets locked. Now you can’t use it until you upload a scan of your driver’s license and proof of your address. Some people have even had their credit cards shut down by their card issuers.
It doesn’t happen often, and I’d bet that most people don’t run into these sorts of problems. But it can happen, and if you only have one credit card, it puts you in a difficult position.
The simple solution is to have credit cards from more than one card issuer. For example, get an American Express card and a Chase card, instead of just one or the other. In the unlikely event that you have trouble with one card issuer, you still have another option.
For most people, having at least two credit cards makes sense. You could earn more rewards, it helps your credit, and it’s safer than relying entirely on one card. The key is to avoid overspending and to always pay your credit card bills in full. If you do that, you’ll get the benefits of carrying multiple cards without any drawbacks.
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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. American Express is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.
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