Two is Better Than One When It Comes To Credit
Plastic money as a mode of payment has gained prominence in India, especially with the push towards digital payments after demonetization.Usage of debit cards was resurrected and credit cards got a new lease of life.
Speaking of the latter, credit cards have always been viewed with skepticism compared to debit cards.Even those who own one are very wary regarding getting another. While one debit card is issued per savings account, an individual can get multiple credit cards issued from a single issuer, or spread his cards across issuers, even with those he does not have anysavings or deposit account with.
Multiple credit cards have several benefits. Here is a list of four of them:
When talking about money, it is always good to diversify payment modes. An additional credit card, or two, help do just that. Sometimes, a card may not function at a point-of-sale terminal for an unknown reason. Multiple cards help avoid such a situation. This can be crucial if shopping abroad where certain merchants may not accept cards issued by a particular issuer like Visa or Master Card, or American Express, among others.
While travelling, one can store one’s credit cards across different places so that in case of an unfortunate incident of theft, an individual still has another card to make payments with.
Benefitting from varied payment cycles
Owning and maintaining a single credit card seems simple enough. Spend during the cycle and make full payment before the due date. Adding another credit card into the mix seems like a hassle because of the two payment cycles (or more in case of more cards). Some cardholders try to align the credit and payment cycles of their various credit cards in order to simplify the payment problem.
But there is a benefit to be had here. Different credit cycles allow for balancing the outstanding payments between cards and help maximize reward points as well as provide a broader grace period – the period between the end of the usage cycle and the last payment date.
Maximizing reward benefits
Different credit cards cater to different needs: fuel payments, grocery shopping, lifestyle, air travel, and co-branded partnerships. While there are reward points for all purchases, credit cards offer higher points for the avenue they have been designed for. So if one is a frequent air traveler and shops at a particular merchant quite frequently, a co-branded card with an airline or travel company and another focused on that particular merchant would be more useful than just one of them.
Improving credit score
This benefit is vital. It is advisable not to spend over half of your credit limit consistently as it tends to negatively impact your credit score, which can hamper your chances of getting a loan in the future. Thus, it is useful to get another card(s) issued. A lower utilization percentage on multiple cards is better for your credit score, which will be hard to come by with a single card.
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