A common misconception is that using credit cards as a form of payment invites debt traps and wasteful spending. This myth not only deters many people from getting credit cards and using them wisely, but even those who have a credit card tend to then refrain from applying for more cards out of the fear that they will end up overspending and, in the worst case scenario, getting caught in a debt cycle.
All of such people, honestly, are unaware of the fact that the responsible use and repayment of onecard credit card determines whether they are beneficial or detrimental to one’s financial situation or not. Credit card in itself is a useful tool, and its entirely upto you how you make it boon for yourself or a bane.
Let’s look at some of the pros and cons of having two or more credit cards:
Is having several credit cards a good idea?
Various factors, including your spending patterns and frequency of purchases, will influence how many credit cards you should have. Holding multiple credit cards, whether they be of the same type or a different variety, has advantages such as higher rewards on spending across cards based on their reward point structures, assistance in spreading out expenses over the month in accordance with each card’s interest-free period, backup in case the primary card is lost or stolen, and an improvement in your credit score when you keep your CUR below 30%.
But in order to make sure the benefits always outweigh the drawbacks, the secret to maximising these benefits is in the prudent use and repayment of credit cards. Someone who uses multiple credit cards without a need runs the risk of falling into debt as they continue to rack up unpaid balances across all of their cards if they lack financial discipline.
How do you choose the best credit card for women when you apply for your next card?
People who want to apply for the best credit cards should think about their spending patterns and perform a cost-benefit comparison of all the credit cards that are offered. One should apply for a travel credit card with greater benefits for travel-related expenses if they frequently spend more money on travel and lodging than on other costs, like shopping.
Comparing all of the onecard credit card benefits, including reward points, free gifts, cash back, discounts, etc., is crucial when conducting a comparative cost-benefit analysis. The card should be chosen whose benefits outweigh its annual fee the most. Remember that when spending on the card exceeds a certain amount, many best credit cards in India also give you the choice to waive or reverse joining or annual fees.
Advantages of having several credit cards
-The potential to gain more advantages
Due to the different usage and spending patterns of various consumer segments with varying habits, lifestyles, incomes, locations, etc., credit card issuers typically design best credit card for women reward point programmes in accordance with the set target of consumers.
For frequent travellers, for instance, credit card companies offer a category of travel credit cards. With these cards, you can get benefits like free air miles, free access to lounges, hotel credits, and higher reward points on travel-related purchases. The target market for the class of fuel credit cards that issuers offer, on the other hand, is consumers who regularly and significantly spend money on fuel. Because they will be able to spread out their spending across more cards, in accordance with each card’s available reward point system, they will be able to reap greater rewards. This is why having multiple credit cards can be especially helpful for those who have relatively higher onecard credit card spending patterns across several of these categories.
-Decreases CUR to aid in improving credit score
Your credit utilisation ratio, which calculates how much of your available credit each cardholder uses, can be decreased by having several credit cards. When you go over this 30% limit, credit bureaus frequently follow suit and lower your credit score, which, if done frequently, can hurt your credit score. A CUR of greater than 30% is typically regarded by lenders as a sign of credit hunger. Keep track of your spending across all of your credit cards, make timely payments, and limit your spending to 30% of the total credit limit to raise your credit score and, as a result, your overall eligibility for loans and credit cards moving forward.
Utilize the time that is interest-free.
The time period between the date of a onecard credit card transaction and the payment due date for that billing cycle is referred to as the interest-free period. There is no interest charged on credit card transactions during this period, with the exception of cash withdrawals made with a credit card, provided the entire balance is paid by the due date. This period is ordinarily between 18 and 55 days for the majority of credit card issuers, depending on the date of the credit card transaction (s). It is a wise move for best credit card for women users who have multiple credit cards to spread out their planned large-ticket spending across various cards based on the remaining interest-free period available in order to maximise the interest-free period on each card.
-Acts as a fallback in case the primary card is misplaced.
It typically takes a few days before you get a new replacement card if your primary credit card is lost or stolen. In these situations, having multiple credit cards can help you direct your spending to an available credit card or cards, maintaining your liquidity and purchasing power.
-The potential for going over one’s allotted spending amount
The majority of credit card issuers tend to entice customers to spend by offering sizable discounts and other offers throughout the year, especially during festivals and sales, so people who lack financial discipline run the risk of overspending beyond their ability to repay.
-An additional application for best credit card for women will temporarily lower credit score.
Card issuers check your credit report after receiving your application to determine your creditworthiness. Although these hard inquiries—also referred to as lender-initiated credit report inquiries—can temporarily lower your credit score by a few points, this effect is only temporary. A credit score recovery can happen gradually with responsible use and repayment of onecard credit card.