Credit cards are not only a good payment source – they are also a tactical financial tool. Consumers typically start their credit journey with one card, and eventually ask the question: Should I have a second credit card? And most of the time, the answer is yes!
Having more than one credit card is not about spending more. It is about spending more wisely. Whether you are looking to gain rewards, build a more robust credit profile, or just add more flexibility, there are several benefits of having a second credit card.
In this blog, we will explore the top 5 reasons to consider obtaining a second card, and how it could be of financial benefit to you.
1. Maximise the rewards across spending categories
One of the biggest motivators to get a second credit card is being strategic in the way you seek rewards. Most credit cards offer rewards in the format of cashback, points, and miles, but they typically come with category-specific value. You may have one card that offers 5% back on groceries and another that offers 3% back on travel and gas.
With an additional credit card ability to assign an appropriate credit card to the purchase with the highest return, you will never leave money on the table after you swipe your credit card.
Example:
Let’s say you have a credit card that offers high rewards on online shopping, you have now added a second credit card that rewards you for dining out or gas expenses, it would feel like a win-win to your rewards options. Every rupee you spend is now working harder for you.
While some people can look at these rewards options differently, the value of cashback or points can take a considerable amount of time to accumulate. Once they have compounded over time, they have real value of savings either for discounts on travel, or cashback into your bank account, or a gift card.
2. Increase your overall credit limit
The percentage of credit you’re using versus your overall limit, known as your credit utilisation ratio, is arguably the largest factor contributing to your credit score.
Here’s how that works: for example, your credit card limit is ₹1,00,000 and you only spend ₹30,000 for the month, you only have a utilisation ratio of 30% of your credit limit. While this is not considered poor credit utilisation experts recommend that you keep your credit utilization ratio below 30% if you want your credit history to remain in good standing.
Now add a second credit card with the same ₹1,00,000 limit, and you now have total credit of ₹2,00,000. With the same monthly spending, you would be utilizing only 15% of your credit, which is a big win for your credit score.
Having a better credit score is not just something nice to have; it realizes increased access to loans, lower interest rates, and bargaining power when dealing with lenders.
3. Have a backup for emergencies and overseas travel
Have you ever had your card declined unexpectedly? Lost it while travelling? These are annoying situations to be in, and it’s worse when you are using the card for your necessities. This is why a second credit card could really save the day.
Here’s why:
- If one credit card ends up being declined, you already have a backup.
- If your card is stolen, or your transaction is blocked, you won’t be financially stranded.
- When travelling overseas, certain cards may give you better currency conversion or international transaction benefits.
- If you have ATM withdrawal fees, then you will avoid these fees by using your backup credit card instead.
- Also, some cards offer emergency travel assistance, insurance coverage, and access to global concierge services, giving you extra comfort and security when you need it most.
4. Set your expenses apart and make a budget
It’s easier to manage finances when you can separate spending. With two cards, you can separate their purposes:
- 1st Card: Use your first card for personal spending, things like shopping, groceries, dining, and entertainment.
- 2nd Card: Use your second card solely for professional expenses, business expenses, travel expenses, and work subscriptions, too.
Separating your expenses allows you to budget, submit taxes more easily, and track your spending habits. Many self-employed clients or freelancers enjoy the benefits of separating expenses for exactly this reason and can see where income goes versus expenses, and do not need to sift through personal spending mixed with business transactions. This is also a valuable habit even if you are not self-employed. Again, it makes managing your money and financial habits easier and gives you more control over your financial activities.
5. Take advantage of intro offers and exclusive benefits
Credit card issuers offer attractive welcome bonuses, 0% interest offers, and special offers to entice new members. Getting a second credit card gives you access to those bonuses, 0% offers, and exclusive offerings, all while not being required to downgrade or cancel your current card.
Common introductory offers include:
- Bonus reward points or cashback for the first 90 days of spending
- No annual fee in the first year
- 0% interest will apply to EMIs or balance transfer for 6-12 months
- Free access to an airport lounge, travel insurance, and dining deals
You may be able to access immediate value in these offers, along with the existing benefits your older card provides. If, for example, your current card did not offer travel benefits, you would use the secondary card for lounge access or to earn air miles.
Acquiring a second card isn’t about creating double the debt- it’s about double the benefits. And if you’re looking for a second credit card, Kiwi is worth considering as it has made virtual RuPay credit cards that are free for a lifetime and can instantly be issued directly to the users. It’s great features such as ability to pay at both online and offline merchants without the need for a physical card, super-fast rewards through instant issuance, cashbacks paid in real-time directly into the bank account of users, and milestone rewards for various activities through Kiwi Neon membership makes it suitable to be your second credit card.
At the end of the day, if you are a responsible credit manager that has a firm grasp of your spending habits, a second credit card can be powerful financial tool especially Kiwi as it can track and manage the user’s expenses all through the app so that they can always be aware of their financial wellbeing.
