Using just one credit card can restrict your ability to make certain purchases if you hit the credit limit. On the other hand, owning multiple credit cards comes with both advantages and disadvantages. Let’s explore them.
Credit cards have become a widely used financial tool today. Many individuals choose to own more than one credit card. While these cards offer the convenience of making purchases even without immediate funds, it’s important to remember that the amount spent must be repaid by the next billing cycle. Excessive reliance on credit cards can often lead to a debt trap, where failure to pay dues on time may attract high interest rates and penalties, sometimes as steep as 24 per cent. In this article, we will explore both the advantages and disadvantages of having multiple credit cards.
Advantages of having more than one credit card
- Usually, a credit card has an interest-free credit cycle of about 45 days. If you have more than one credit card, you can extend you can effectively extend this period by paying the bill of one card using another card, this process is known as credit rollover, which can add roughly another 45 days of interest-free credit.
- Having credit cards from different banks gives you the opportunity to avail various types of reward points, cashback and special offers. This allows you to save on your purchases.
- ome credit cards come with exclusive, long-term benefits, such as ongoing discounts on movie tickets or hotel bookings. If you frequently travel or enjoy movies, these cards can offer significant advantages.
Disadvantages of having more than one credit card
- When you own multiple credit cards, you may be required to pay annual fees for each one. Therefore, it is important that you calculate whether the benefits you get from the cards are less than their annual charges.
- Having more credit cards increases the burden of financial liability on you. Also, having more cards increases your total credit limit, which increases the chances of getting into a debt trap.
- Managing multiple credit cards means keeping track of various billing dates and credit cycles. With three or more cards, the chances of missing a payment increase. In such cases, maintaining fewer cards can help keep your finances simpler and more organized.
Also Read: High credit score benefits: Easier loans, lower interest rates and even job opportunities | Details
Also Read: Apple may ignore Trump’s ‘not in India’ call and continue to manufacture iPhones in India: Know why
