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Is It Good For My Finances To Have Multiple Credit Cards?

Adhil Shetty


I have three credit cards. I want to understand the impact of multiple credit card on my finances and whether it would be wise to discontinue one or more card accounts. – M. Jadhav

 Response: The credit card is a versatile spending tool, provided you use it with discipline. Having multiple credit card can be beneficial for you in many ways. Here’s how.

Split the spending to keep credit utilization ratio (CUR) lower: CUR is the ratio between your actual spend and the total card spending limit. For example, your spending limit is Rs. 100,000 but you spend only Rs. 30,000 so your CUR is 30%. CUR plays a part in the computation of your credit score. If you frequently have a high CUR, it will lower your credit score marginally. Instead, if you hold multiple credit cards, split your spending between them and keep the per-card spend to about 20-30%.

More offer and discounts: Different credit cards have different offers and features. For example, one card may offer you an iPhone cashback while another offers you a Pixel 3 offer. So using multiple credit cards, you can multiply your benefits, reward, discounts, and cash back. Try and diversify your cards to get a good mix of offers useful to you.

Get more spending limit: With multiple credit cards, you also get a higher combined spending limit.

Age of credit line matters: The longer you have a credit card or loan account, the more impressively it reflects on your repayment history. For example, a 10-year-long credit card means you’ve consistently repaid your dues. Therefore, longer age of credit lines improve your credit score.

Needless to say any time you use your credit cards, you must repay the dues in the same billing cycle. Late payments attract penalties and card balances attract a hefty interest rate leading to unnecessary, expensive debt. If you can efficiently manage more than one credit card, it can give you better spending power and boost your lifestyle.

Have a question on personal finance? Ping me on Twitter at @adhilshetty with the hashtag #AskAdhil.