Is It Good To Have Multiple Credit Cards?

Introduction

Simply having a credit card can bring a ton of convenience into your daily life. So, it stands to reason that a second card would bring you even more convenience, right?

Perhaps it comes in the form of having a card you can use if you have issues with the first card, or maybe you want to maximize the rewards you get on purchases.

Sure — having a single credit card may keep things simple, but there could be advantages to having another. Here are a few reasons why you may want to consider a second card.

Increase Your Purchasing Power

One of the immediate effects of getting a second credit card is having more credit available to use.

If you have a credit card with a $500 credit line and then get a second card with the same limit, you’ve effectively doubled your purchasing power.

What’s more, if you’ve already demonstrated the ability to use credit responsibly with your first card by making regular on-time payments, there’s a chance the credit line on your second card could be set higher than the first, so that could boost your purchasing ability even further.

Of course, the downside is that, if you don’t continue to exhibit good credit habits, you could potentially amass more debt quicker with a second card. So, exercising restraint in making purchases and continuing to pay at least the minimum amount due on both accounts on time each month is doubly important.

More Acceptance While Shopping

You’ve probably heard of the major credit card networks, such as Visa, Mastercard^®, American Express^® and Discover^®.  They’re practically household names. But here’s the thing: Stores don’t always accept cards from every network.

Maybe you’ve run into this situation at a small business with limited acceptance, or a warehouse club that exclusively uses one network’s cards.

If you only have a single credit card and find yourself at a store that doesn’t accept that network, you may  have to pay with cash or a debit card. And then you’d miss out on rewards and protections offered by credit cards.

But you could avoid that dilemma if you have a second card that uses a different network. You may be able to make more purchases on credit with a larger selection of merchants.

Have A Backup Credit Card

Let’s say you’re out of town and your credit card gets lost, damaged, stolen, or even closed due to fraudulent purchases. If that was your only card, you’re going to have to rely on cash or debit card until you can get a replacement. A backup credit card, even if you rarely use it, could help save the day if anything goes wrong with your primary card.

Earn More or Different Credit Card Rewards

If your first credit card doesn’t offer rewards, then it could benefit you to get a second card that does.

And if your first card is a rewards card, having a second credit card could help you to earn more rewards than with just one card at your disposal — particularly if it offers sign-up bonus rewards for making a certain amount of purchases within the first few months of getting the card.

Or your second card may offer rewards of a completely different type, such as airline miles instead of cash back. Some rewards cards also offer additional bonuses for specific purchases, such as extra miles or cash back for renting a car from a certain rental agency or for staying at a designated hotel chain.

With an extra rewards card, you can pick and choose when to use which credit card, taking a more strategic approach to earning rewards.

Potentially Raise Your Credit Score

Having a second credit card gives you a second tool that could impact your credit score for the better if you stick with good credit habits.

Your payment history comprises up to 35% of your credit score. If you only have one credit card account on which you’re making payments, that could paint a narrower payment picture than making payments on two accounts.

With only one account, if you make one payment each month, the most on-time payments you could make in one year is 12. With two accounts, you could make 24 on-time payments in a year, which could tell an even more positive payment story.

Just make sure you’re managing both accounts responsibly and paying at least the minimum amount due on time on both accounts every single month.

There’s another way a second credit card can impact your credit score: It could raise your credit score by lowering your credit utilization ratio, which accounts for up to 30% of your credit score.

A second credit card could give you more available credit, which can lower this important ratio — so long as you don’t spend so much that you effectively negate the additional available credit. You typically want to keep the ratio of how much you owe on a credit card in relation to the card’s credit line below 30%.

It’s worth mentioning that your credit score could drop by a few points when applying for a second credit card. This is because the card-issuer does a hard inquiry to check your credit reports. But this minor drop can be quickly offset by — yep, you guessed it — making consistent, on-time payments.

How to Manage Multiple Credit Cards Effectively

Of course, once you apply and are approved for a second credit card, it doesn’t end there. You’ll have to manage that card, just like your first card. But that doesn’t necessarily mean twice as much work.

These days, most of the work of managing your credit cards can be done through the credit card issuer’s mobile app or website. Whether you’re making a payment, checking your balance or redeeming rewards, you’re just a few taps or clicks away from getting things done.

And if you want to help cut that time down even further, setting up AutoPay could be a great way to save time and protect yourself from accidentally missing a payment. Most credit card issuers offer this service on their app or website and it’s usually as easy as logging in, selecting the option and inputting or updating some information.

Finally, with any number of credit cards, it’s a good idea to use a budget to plan for and track your spending.

With the additional purchasing power of multiple credit cards, plus managing additional statements and payments, there’s always a chance of running up more debt. Ultimately, that could even lead you to seek out debt consolidation options.

But if you’re proactive, stick to your budget, and remember to pay on time, every time, you can reap the benefits of having multiple credit cards while avoiding the risks.

Should You Get a Second Credit Card from the Same Issuer?

It may make sense to get your second card from the same card-issuer, particularly if the second credit card uses a different card network, so you’re better covered when it comes to card acceptance. But you might also find other advantages to going with the same bank.

It may be easier to get a second card

If you’ve been making on-time regular payments on your first credit card, that may weigh more heavily with your current bank in their decision to grant you a second card than it would with another bank. Your bank may even take the initiative and reach out to you with an offer for a second card.

It could make managing both accounts easier

If you set up online account access, it may be easier to manage both accounts if they’re with the same bank — one username, one password, etc. The same goes for using a credit card mobile app. Credit One Bank’s highly rated mobile app for iPhone and Android, for example, makes it easy to manage two accounts, including providing an easy-to-view account overview of both accounts.

You may be able to combine rewards

A second credit card from the same card issuer may use the same rewards program, which could help you accumulate more rewards faster.

It could be easier to manage loss or fraud

If you lose a wallet or purse with more than one credit card in it from different banks, that’s multiple phone calls to multiple banks. Same thing if you discover fraudulent charges on your accounts. By having both cards with the same bank, you can make one call to your bank and help minimize the hassle factor should you ever lose your card or be a victim of fraud.

Can You Apply for Multiple Credit Cards at Once?

It might seem like an efficient use of time, but applying for multiple credit cards in a short span of time is generally not advised.

First off, applying for a lot of credit at once may paint you as desperate for credit approval, which lenders might see as risky behavior. This could lead to getting denied.

Second, triggering a hard inquiry — which happens when you apply for new credit — can lower your credit score temporarily. With a lowered score, you may also get denied.

Finally, credit issuers may also have internal restrictions on how many cards you can apply or be approved for within a certain period.

So, if applying for multiple cards too often or at the same time isn’t a good idea, how long should you wait?

Well, that all depends on your credit, but a good rule of thumb is three to six months between applications. The better your credit, the closer you can stick to that three-month suggestion.

Bottom Line

Only you know if a second credit card is right for you. But before you shrug off the notion of applying for a second card, it pays to understand why it may be advantageous for you to become a two-card carrier.