Multiple credit cards: Advantages and Disadvantages.

Introduction: Credit cards: Advantages and Disadvantages.

*Should you have a lot of credit cards? Yes or no.

There are five reasons for saying yes.

1: More purchasing power.

If you have a lot of credit cards with different credit limits, by adding all the credit limits, you can make a big purchase, of course, in parts. and that makes it easy in circumstances where you need money. You need to make a significant purchase and have a plan where one credit card may not be enough. Of course, the credit card’s credit limit is based on your salary. Then your total credit limit across all your cards may be less than or equal to your salary. Nonetheless, you can expand your entire credit limit by adding multiple cards.

credit cards: Advantages and Disadvantages.

2: Lower credit utilization ratio.

Suppose you have a credit card for Rs. 1 lakh. This means you have a credit limit of Rs. 1 lakh, and out of that, you spend Rs. 90 thousand on average every month, so your credit utilization is 90% on average. But this is not a good number. Why? More credit utilization means a lower credit score. One very important ingredient in the CIBIL score is your credit utilization ratio. The more you utilize your credit, the more negatively it will impact your credit score. That’s why if there are many credit cards, you can divide the same purchase of $90,000 into 2 or 3 credit cards. So if you have two credit cards each for 1 lakh, then for the same purchase of 90 thousand, you can have 45 on one card and 45 on another card, and your credit utilization ratio is 45%. And that will be better for your credit card score.

3: Better CIBIL AE.

When you pay 100% of your credit card bills for the whole month with full dedication. Why did I say the whole month? A whole month doesn’t mean every day! Paying 100% of your credit card bills every month diligently will improve your credit score, and the more credit cards you pay off, the better. Why? Because the credit score will record that you have multiple loans going on, because the credit card is just one way of taking loans, and because you are paying back these loans in a brilliant and truly disciplined fashion every single month, it is very important to pay 100% of your monthly credit card bill statement. If you pay only the minimum amount due. You will feel as if your credit card is still in operation, but you will be paying a very high interest rate on the rest of the amount, which is anywhere in the range of 35% to 45% annually. It is the most expensive loan that you can get in your life. And I will not wish that on anyone. So if you pay 100% of your credit card payments regularly, every month,

4: Multiple rewards and benefits.

The best utilization of credit cards is with purchases that you never have to do benefits and then you earn points. If you have multiple brand cards, you can use them effectively. also on the big sales, especially on the e-commerce sites, like the great India sale on Amazon or the big billion-day sale on Flipkart, you get a lot of cashbacks. and if you have multiple, then you would know. This is for my industry. This is for my HDFC. This is for my SB., and you can pay with almost all of these credit cards. So, the biggest advantage of having multiple credit cards is the rewards that you get from having all of them. That’s why whenever you use multiple credit cards, please ensure that their reward programs do not overlap. On the same merchant, what is the use of these two cards? Please look out for as many exclusive and independent reward programs as possible because they will give you the maximum benefit on your credit cards.

5: Fraud and theft backup

It seems counterintuitive, but I’ll tell you that counterintuitive part of it as well. But God forbid, if one of your credit cards gets stolen or lost, then you instantly block it and make your purchases from the remaining credit cards. And that is the benefit.

Disadvantages of having multiple credit cards

1: It’s hard to keep track of multiple C.

With more cards, it is more difficult to track the payments, and if any fees have been added by Mistake, it becomes a very tedious task to be able to track your accounting.

credit cards: Advantages and Disadvantages.

2: Risk of overspending.

When you have many credit cards and your credit limit increases, I have 1 lakh from here and another 1 lakh from here. So, I have 3 lakhs because I have three credit cards, which gives you the illusion of a lot of money, but there can be a risk of overspending. Never see your credit card as a loan. As with a debit card, use your credit card. The only difference is that with a debit card, the money is deducted instantly. Here, you pay that money after 30 to 45 days. But the money has to be paid in full. So, whenever you make any payment with your credit card, do it only because you have the entire amount already. Or it is going to come in one month. So, the day the bill is generated, you can credit the full amount by its due date and enjoy the card.

3: Increased Temptation:

With multiple credit cards, spending beyond your means is more tempting. The ease of swiping or tapping a card can lead to impulsive purchases and contribute to financial instability.

4: Identity Theft and Fraud Risk:

Multiple credit card accounts increase your exposure to potential identity theft and credit card fraud. Each card represents another potential target for cybercriminals, and monitoring all your accounts for suspicious activity becomes more challenging.

5: Complexity in Financial Planning:

Multiple credit cards can complicate your financial planning.

6: Reduced Available Credit:

Owning multiple credit cards can reduce your available credit across different accounts.

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