Depending on your financial circumstances, there may not be a single perfect card that meets all of your needs. Therefore, having more than one credit card can be a good option. Here are some other reasons having more than one credit card can be smart:
- Save Money With Balance Transfers. If you have an existing balance on a credit card, often you can transfer the balance to another credit card with a 0% APR introductory rate, saving you money by allowing you to avoid paying interest on the balance during that intro period.
- Collect Sign-up Bonuses: Many cards offer sign-up bonuses in miles, points, or cash back.
- Improve your credit score. Spreading your balances over multiple cards can lower your credit utilization rate which may increase your credit score.
- Maximize rewards. Using multiple credit cards is a good way to earn more rewards if you tailor your spending according the rewards each card offers. For example, if you have one card that earns you 2% cash back on everyday spending and 5% cash back on travel spending, you will maximize your cash back by using the 5% cash back card on all travel spending and the 2% cash back card on all other spending.
- Maximize your benefits. One card may offer discounts on hotel and resorts while another card may offer you travel miles. Using both cards will increase the total benefits you can enjoy.
How Many Cards is Too Many?
Although cardholders with good or “prime” credit typically hold an average of 4 or more credit cards (Consumer Fin. Prot. Bureau, Credit Card Market Report, Dec. 27, 2017, available at http://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-card-market-report_2017.pdf), fewer or more may be appropriate for your individual circumstances. A good rule of thumb is that if you can pay off your balance every month and are utilizing less than 30% of your available credit limit each month, you probably do not have too many cards. If however, you have maxed out the available balance on your cards or have missed any payments on your cards, you likely have too many credit cards and should be worried about the negative impact to your credit score.
How to Strategically Use Multiple Credit Cards
To successfully manage multiple credit cards, you should be a responsible card-holder and be prepared to pay each of your multiple credit card bills on time. Some other tips to maximize your card usage are:
- Pay-off Your Balance Transfers within the Introductory Period. Most balance transfer cards offer an introductory 0% APR for a limited time period (usually 9-12 months). To avoid paying interest on the transferred balance, pay off your balance within this introductory period. The money you save on interest during this period will likely outweigh any balance transfer fee.
- When transferring a balance, don’t immediately close the older account. If you close out an account immediately after transferring the balance to a new card, the average length of your credit history will be shorter, which can lower your credit score. Unless the older card carries a high annual fee, we recommend keeping the older account open at least until your newer card has built-up a positive history.
- Utilize rotating bonus point offers. Some cards offer rotating bonus points in categories of purchases such as groceries, gas, restaurants, and retail stores. If you have more than one card that offers rotating bonus points, you will be able to alternate spending between the cards according to the bonus points offered during that period.
- Maximize cash back on your everyday purchases. For everyday spending, you may prefer a card that offers cash back on purchases such as gas or groceries.
- Maximize travel rewards on travel spending. If you are a frequent traveler you will want to have a rewards card that earns a higher level of rewards on travel spending and offers travel benefits like free checked bags, lounge access, and more. Travelers may also benefit from airline-specific and hotel-specific credit cards, which may offer 2X, 3X, or more points on airline and hotel spending. By using both types of cards in their respective categories you will maximize the points you earn.
- Don’t overspend. Finally and most importantly, don’t overspend. If you spend more than you can afford to pay back each month, your debt will increase and your credit history will take a hit. Although having multiple cards will maximize your rewards and benefits, the value of those could be offset by ongoing interest payments on balances you carry for an extended period of time.
Chase Sapphire Preferred® Card
With a 60,000 point new cardmember bonus when you spend $4,000 in the first 3 months of having the card, plus 2x points on travel and at U.S. restaurants — all for a $95 annual fee — this card is one of the top rewards card values available. Chase points are transferable to 9 airlines and 4 hotels, giving you the option of booking directly via these loyalty programs for some massively lucrative award redemptions in first & business class or at 5-star luxury hotels & resorts.
