Is having multiple credit cards a good idea? What are the benefits? | Mint

As a credit card user, you may have a temptation to procure the second or even third. This is quite normal so long as you know what you are getting into.

Oftentimes, card users use one lifestyle card and another one lounge access. Or else, one card for fine dining and another one for online shopping. Occasionally, some card users get a second card for raising their credit limit.

Let us understand whether it is a good idea to hold multiple credit cards.

These are some of the scenarios when it is a good idea to hold multiple cards

I. When you want to raise your credit limit: Sometimes the key reason for holding multiple cards is to maintain a high credit limit. For instance, two cards with ₹5 lakh limit each means total credit limit of ₹10 lakh.

II. When each card serves a unique purpose: As mentioned above, one card may serve one unique purpose. For instance, one card for fine dining and another one for discount on movie tickets, and a premium card for concierge service.

Some key advantages of holding multiple cards

1. Improved credit score: More cards mean higher total credit limit, thus leading to lower credit utilisation ratio. For example, if you use ₹20,000 across two cards with a ₹1 lakh total limit, your utilisation is just 20 per cent.

2. Better rewards and offers: Different cards offer unique benefits such as cashback, travel rewards and dining discounts. You can, therefore, choose the right card for each type of spending.

3. Backup options: What if one card of yours is not working due to tech issues or has been maxed out. Another card can come handy in this case.

4. Build a longer credit history: Keeping old cards open can help your credit age, which is good for your credit score.

Disclaimer: Mint has a tie-up with fintechs for providing credit, you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.

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