Credit cards have become a primary way for consumers to pay for their purchases. The convenience, offers and rewards attached to the credit cards makes it easy for people even to drift away from their budget.
If not used diligently, it is easy to step into a debt trap and that stops existing credit card holders from applying for an additional card. But there are pros of having multiple cards for those who are financially disciplined.
Banks design card reward points programs keeping in mind the customers’ spending patterns. For instance, free lounge access, frequent travellers, travel credit card suits, among others for those who are always on the go. Similarly, there are cards designated for other spends. Consumers holding multiple cards can spread their spending according to the reward points structure of the cards.
Having multiple cards also helps in reducing your Credit Utilisation Ratio (CUR) which is proportional to total credit limit used by you. In simpler terms, CUR is another way of referring to your credit card debt.
All credit card transactions except cash withdrawals are interest-free for the billing cycle. This is anywhere between 18 and 55 days depending on the date of the credit card transaction. Having multiple cards will help you avail maximum possible interest free period. And in case of loss or theft of your credit card, you can divert the spending to other cards to keep your liquidity intact.
On the contrary, holding multiple cards can easily make customers lose track of their spending and more often than not end up spending extra to avail offers and discounts. The expenditures sometimes exceed one’s replacement capacity.
Among others disadvantages of holding multiple cards is the generation of multiple due dates and bills. Those having trouble tracking dates and repayment schedules are always at a risk of missing out payments and levying penalties. Late payments also reduce your credit score.
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