How Many Credit Cards Should You Have and How To Manage Them?

If you have several credit cards and are planning to apply for another one, you may wonder what is the ideal number of cards you can have. To answer this simply, you can own as many credit cards as you want as long as you are managing them the right way. In fact, having multiple credit cards would allow you to maximize the rewards and benefits on each card.

While there is no set number of cards to have, you must keep the right mix in terms of issuers, benefits, card categories, fees and charges, etc. For example, if you already have a card or two from HDFC Bank, it may be a good idea to apply for SBI Credit Card or Axis credit card next, instead of owing another HDFC credit card.

So, before you apply, let's talk about some important aspects to keep in mind when choosing a new credit card while you are already owning a few.

Choose a card that matches your spending pattern

It is most likely that all the credit cards you are eligible for, would not be best suited for you. Credit cards provide numerous benefits, such as cashback, reward points, air miles and discounts on online & offline transactions. However, you should choose a credit card that is best suited as per your requirements and spending pattern. For that, you must analyze your monthly needs and choose a right credit card. For instance, if you are a frequent online shopper, then a credit card that offers discounts on online brands, like Amazon, Flipkart and Myntra, would be a suitable choice for you.

Consider the annual fee and your budget

After shortlisting a few credit cards based on your spending habits, you must figure out which one works the best for you under your budget. Therefore, it is important to read about all the fees and charges, such as annual fees, late payment fees, finance charges and more about a credit card. Usually credit cards with low or no annual fee come with basic benefits. So, if you wish to avail premium privileges like an excellent reward rate, unlimited lounge access or complimentary memberships, it is likely that you would have to pay a high annual fee.

Don't apply for multiple cards at once

You can have more than one credit card, but applying for multiple credit cards at the same time is not recommended. Whenever you apply for a credit card, a hard inquiry is raised against your credit profile, which can temporarily impact your credit score. Therefore, you should always apply for one credit card at a time, this way, you can have multiple credit cards without hurting your credit score.

How to manage multiple credit cards

The more credit cards you have, the more you need to be credit-savvy. You will have to keep track of multiple due dates, reward points, fees and credit limits to make the most of each of your cards.

There are 3 key rules to optimizing the benefits of multiple credit cards:

1. Pay the total amount due on each card on time: The most important rule regarding credit cards is that you should always pay your bills on time and in full. No matter how many cards you own, you must clear the bills on each card. Non-payment will lead to late payment charges as well as finance charges which can go as high as 49% p.a. on some cards. At the same time, new transactions on your credit card will also attract finance charges if you haven't cleared your previous balance. So, you must spend only as much as you can afford to pay back. If you find it hard to keep track of all billing cycles, you can set autopay or reminders to make payments on time.

2. Use the right card for the right purchase: If you have multiple cards, it is necessary to analyze when to use each card. For example, if you have three cards with different reward rates for different categories. You must use a card that provides maximum rewards for the aligned category.

3. Keep track of reward points, cashback, terms & conditions: Each card has a separate cashback policy, reward points policy and terms & conditions. For instance, if you have five cards, each will have a different rate of reward earning, different set of categories where extra rewards are offered and a different way to redeem the accumulated points.. Also, reward points come with an expiration date which is why you must utilize the reward points within the given span to maximize the benefits of the credit card.

Bottom Line

Having multiple credit cards has its own pros and cons, depending on how you use them. You can have multiple credit cards if you are sure that you can manage them. Otherwise, having multiple cards can also lead you to a debt trap. In the end, use each card as per its best feature and always pay your dues on time.