6 Benefits of Having Multiple Credit Cards
In the wake of the Demonetisation act flagged in late 2016, the Indian economy rose to embrace a phenomenon called ‘Cashless India’, wherein the state encouraged people to use digital transactions as well as credit and debit cards as primary modes of payment, as against the conventional cash. As a result, the country registered an increase of close to 74 Lakh Credit Card users within just one year.
Today, as many as 3.6 Crore people across the nation use Credit Cards. That being said, there are still some people who fear having Credit Cards, or multiple Credit Cards per se, for fear of falling into a debt trap.
However, it needs to be understood, that when used optimally, Credit Cards can help build a better credit score, increase the creditworthiness of an individual, and accentuate the financial freedom enjoyed by one! Given that a Credit Card Offers the opportunity of enjoying an interest-free credit for up to 45 days, it is one of the most dependable sources of accessing some additional funds, when you don’t have them right under your sleeve. Besides, you are not required to repay the amount in one go. Depending on the terms of the card you choose, you can conveniently repay the credit in fixed intervals.
Then again, Credit Cards provide you with the unprecedented opportunity of earning reward points, discounts, flyer miles and even cashbacks.
Now that we know some of the inherent benefits of Credit Cards let us take a quick look at the advantages of using multiple cards.
1. Revel in a Higher Credit Limit
If you enjoy a credit limit of 1 Lakh on one of your cards, getting another Credit Card with a limit of 50,000 will help increase your overall credit limit, thus enhancing your financial freedom. This can especially come in handy if you have a large family, with additional expenses popping up now and then.
2. Enjoy a lower CUR
Credit Utilisation Ratio (CUR) is primarily defined as the ratio of the amount that you pay for using your Credit Card and the credit limit that you enjoy. Ideally, the CUR needs to be maintained at 30%. Hence, if you use a single card, with a limit of 50,000 you will be able to make purchases only worth 15,000 if you wish to maintain a reasonable CUR. However, if you have yet another card, with a credit limit of 42,000, then you will be able to use an additional credit worth 12,600 without exceeding your CUR. Now, isn’t that a great way of enjoying greater credit, without any additional risk!
3. Enjoy Varied Benefits
In the present day times, a vast majority of Credit Card providers team up with partner brands to offer you distinct benefits. For instance, the SBI SimpleSAVE Credit Card provides benefits of paying utility bills and retail shopping, while the Citibank PremierMiles Credit Card helps you earn flyer miles on various spending. Having two such distinct cards can help you reap the different benefits offered by them both.
4. Build a Better Credit Score
Having multiple Credit Cardscan take you a long way in building a better credit score, if you use the cards regularly, and pay all your bills on time. This will subsequently help you in getting quick approvals on your loan applications, and may even help you in getting a higher credit limit!
5. Balance the Credits
Using multiple cards can help you avert the risk of piling up a high-interest credit on a single card. When you exhaust the purchasing power of one card, and already have an outstanding bill, you can simply use the other card to make payments. This balancing act will ensure that you save yourself from paying unnecessary interest on your bills.
6. Different Cards for Different Needs
If you own a business, the chances are that you often need short-term credits for meeting the needs of the enterprise. In such a case, it can pay you to have a Credit Card that you can use towards your business needs, and another one to help you enjoy purchases of personal nature.
We know that the benefits yielded by multiple Credit Cards are more than just compelling, but it is strongly recommended that you opt for more than one card, only if you are fully confident of your financial discipline. If you are someone who loves to go on expansive shopping sprees or are not inclined to make your bill payments on time, we suggest you stick to having just one card. After all, you don’t want mounting bills accruing interest for no good reason!
Also Read: 9 Best Credit Cards You Should Own in 2018
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