In today's era of digital and cashless transactions, credit cards became a way of life. The big question is - should we have multiple credit cards?
Is it good to have multiple credit cards?
The most common school of thought will say NO since the credit card is always associated with mounting debts. However, this only applies to people who are compulsive spenders.
If you’re a wise spender with self-control over money matters, then YES - having multiple credit cards will actually bring more benefits than harm. Read on to find out why.
More cards, more benefits
Having multiple credit cards allow you to enjoy more benefits from different cards!
For example, AEON Classic Mastercard offers 2x Points per RM1 spent at AEON Stores, while ALLIANCE Bank Gold Visa offers 2X Timeless Bonus Points for overseas expenditure. So if you’re a person who shops frequently at AEON Stores and also travels often, you’ll have the best of both worlds with these separate cards!
Contributes to credit score
Contrary to popular beliefs, having more than one credit card can actually help your credit score. How? Simply by keeping your debt utilization ratio low, when you spread out your purchases across numerous cards rather than one.
Keep in mind though, having multiple cards might also cause more harm to your credit score if you maxed out the cards or have a high amount of unsettled debts. So be mindful!
Backup and emergency
There might be a time in your life, that your card’s lost or stolen. When that happens, your one and only source of cashless payment will be unavailable.
Another scenario is that, you might land yourself in an emergency situation where you’ll need more money than your credit limit. For example, your loved one might have a medical emergency not covered by insurance. So you have to pay for hospitalization fee of RM10,000.
Unfortunately, your credit limit is RM5,000 and you don’t have much cash lying around. In such circumstance, having more than one credit card will help - all you need to do is pay the other RM5,000 from the second card without a problem.
Therefore, to prepare for possibilities like these, it's good to have more than one credit card.
Pay debts with balance transfers
A balance transfer is an act of moving debts from one credit card to another. By doing this, you can take advantage of lower interest rates to pay off your debts. As compared to personal loans, balance transfers have a shorter period thus help you to pay off debts at a quicker rate.
Unsure where to start? No worries, we compiled a list of banks with the best transfer plans: The Best Balance Transfer Plans in Malaysia.
The dark side
Though having more than a card is mostly beneficial, but everything comes with a dark side - especially if we’re not careful! Therefore we’d also like to warn you about the potential dangers of owning multiple cards.
Firstly, although your credit score won’t be hurt, card issuers might deny your future card applications because you've applied for numerous cards already. It’s because, for some card issuers, it’s an indication that you might face difficulty paying off your monthly payments.
Secondly, if you don't have a proper financial plan or stable monthly income, owning multiple credit cards will be a stressful chore. You’ll be in danger of drowning in debt due to this, so always make sure that you have it all planned out before applying for more cards.
How many credit cards should you have?
So, how many credit cards should you get?
There’s actually no formula as to what’s the best number of cards to have. In fact, Walter, a man from California USA is the Guinness World Record holder for owning the most credit cards - 1,497 cards to be exact. Surprisingly too, he didn’t have any huge debts and his credit score is nearly perfect!
He might be an extreme example, but this shows that at the end of the day, it's up to your own wise discretion and judgement on how many cards you can handle. If you’re still worried about overspending with multiple cards, learn how to use credit cards responsibly here.