Credit Card Holders Attention: Do you have multiple credit cards? Then you need to know this. As Banks provide numerous facilities and offer to its credit cards holder; reward points to cashback. In the era of the internet, millions of people do online shopping via credit cards and earn cash back or discount offer. These offers vary from bank to bank.
However, there is a large number of the section that fear to hold a credit card and even some desist from applying for multiple cards. They fear to get trapped in accumulating unmanageable debt. For those who are financially disciplined, having multiple credit cards is boon more than cons.
As banks offer several attractive benefits to credit card holders like bank offer, cashback, reward, discount and many more. Here are some surprising benefits of having multiple credit cards:
Increases your reward points:
The more you purchase more reward points you will be liable to earn. Some cards offer higher reward points on fuel transactions, others offer higher reward points on air travel or shopping etc. Spending a range of amount every month via credit card will help you save more money for you than any other credit card variant.
Beneficial for credit score:
Holding multiple credit cards can help reduce your credit utilisation ratio which is a proportion of the total credit limit used by you. Banks consider individuals having credit utilisation ratio over 30% as credit hungry and tend to reduce credit score on breaching this limit.
Backup in case of theft/loss of primary card:
In case of theft or loss of your primary credit card, having other credit card is a perfec tbackup plan as it usually takes at least three days to receive replacement credit card. Under such circumstances, you may be forced to swipe your debit card for making payment. Having multiple credit cards would allow you to divert your payments to other credit cards, thereby keep your liquidity undisturbed.
Interest-free period of credit card is when you have to clear your bill i.e. between the 1st day of its billing cycle and the due date for paying off outstanding dues. Transactions made during this period incur no interest cost as long as the entire amount is paid on time.
This interest free period can range between 18-55 days depending on when a particular transaction was made. Having multiple cards with billing cycle spread across the month will help you to spread out your expense.
Everything has its cons and so does having multiple credit cards. So here are Cons of having multiple credit cards:
Risk of over-spending:
Many credit card holders end up making card spends just to avail attractive offers and discounts by the banks. Thus, having multiple credit cards may risk those lacking financial discipline to spend beyond their means.
Risk of reduce credit score:
If you already hold credit card and apply for a new one, the lenders automatically fetch your credit report to evaluate your creditworthiness. Such credit report fetches are considered as hard enquiries and they reduce your credit score by a few points fot a short-term.
Managing multiple cards: Having multiple credit card sometime get difficult as it would lead to the generation of multiple credit card bills and due dates. This may lead them to incur steep finance charges and late payment fees, and may also harm their credit profile.