In an age of rewards, cashbacks, and contactless payments, credit cards have become more than just a payment method—the intelligent financial lifestyle. It is probably safe to say that it’s common to have one credit card. However, many people now also think about owning credit cards to combine benefits, expenses, and credit building possibilities. So, is it a good idea to carry more than one credit card?
Like most things with money and personal finance, there are upsides and downsides to carrying many credit cards. When managed well it can add to financial flexibility. When mismanaged it can lead to confusion, debt, and financial trouble.
In this blog, we are going to even the playing field and break down the good and the bad of owning multiple credit cards; this way you can weigh in on the decision and figure out if it makes sense for your financial habits and goals.
Pros to Having Several Credit Cards
1. Maximise Reward and Cash Back Opportunities in Categories
One of the best things about using several credit cards is the potential to optimize rewards. Most credit cards offer category rewards, such as extra cash back for groceries, rewards points for online buying, and waived gas code.
By using different cards for spending categories, you can maximize the reward limits on different cards.
For instance:
- You can use a co-branded card like Amazon Pay ICICI for your online shopping.
- Use a fuel card like Indian Oil Kotak Credit Card to pay for petrol.
- Use a Travel card for flight tickets or hotel bookings.
Over a period, you will save a lot more and gain even more rewards.
2. Decrease Your Credit Utilization Ratio
Your credit utilization ratio – the percentage of your total available credit that you’re using – is a significant factor in your credit score. It’s advisable to stay below 30% with this to keep your credit in good shape or boost it.
If for example, you have multiple cards, your potential total credit limit is much higher. If you don’t put yourself at risk and increase your total spend, this will lower the utilization ratio naturally and raise your credit score over time.
3. Better Financial Flexibility and Back Up Options
Having multiple cards means greater flexibility and security. If you lose one card, or it is stolen or declined, you have a backup! This is particularly advantageous in emergencies, while traveling, or when shopping from international sites. Also, there are the additional benefits of:
- Separating personal and business expenses
- Using cards with 0% interest offers to finance something short-term
- Cannibalizing deals from various issuers and relying less on one
This diversification reduces your reliance on a single issuer; it also gives you more control of your finances.
Cons of Having Multiple Credit Cards
1. Complicated to Keep Track of and Easy to Forget Payments
The most significant disadvantage of multiple cards is the added complexity. It’s challenging to keep track of multiple statement cycles, due dates, reward programs, and statements—especially if you aren’t organized!
A single missed payment could mean:
- Late fees and interest charges
- Dents to your credit score
- Loss of any rewards you’ve accumulated
It would be easy to lose benefits by mismanaging your credit cards!
2. The Risk of Overspending and Debt
More cards mean more available credit which can be tempting. It is easy to get caught up and overspend, especially when you get cashback or points for every swipe. This can lead to:
- Carrying a balance month to month
- Paying tons of interest
- Going backward in a debt cycle
Credit cards should support savvier spending; not incite lifestyle inflation. If you are struggling with self-control, having multiple cards may be dangerous!
3. Annual fees and hidden fees can add up
With many premium credit cards, you have high annual or renewal fees and if you have multiple cards/rewards programs, your total cost will go up.
Also remember, there are charges in addition to annual fees, and not all are visible straight away. You may see things like:
- Hidden fees for reward redemptions
- Inactivity fees on unused cards
- Foreign transaction fees
Unless you’re actively using these cards and earning significant rewards and benefits that offset these charges, you’re subtracting from your overall savings and benefits, and perhaps wondering if collecting rebates in the first place is worth it.
Having multiple credit cards is an effective way to manage finances if you do it well. Having multiple cards can help you maximize rewards, improve your credit rating, and provide you with extra flexibility just like the Kiwi credit card does. It is a virtual credit card that links to UPI, which means it’s one of the easiest ways to pay with credit in-store or via the internet without relying on a physical card. However, multiple credit cards can also lead to overspending, a missed payment, and fees. The ultimate question is to think about your personal level of financial discipline, organizational skills, and spending habits which Kiwi tracks in its app for you. If you are a good organizer and pay your bill on time, multiple credit cards will be beneficial as you can see with Kiwi credit card where you win reward milestones and instant cashbacks which is a useful every-day feature. However, if you are not a good organizer, you might better off starting with one and going from there. Smart use of credits cards is about control—not just acquiring cards.
To know more utilisation of multiple credit cards, you can also have a look at the article on How to Maximise Rewards by Using Multiple Credit Cards
