Keeping a second credit card won’t lead to financial ruin, and may prove useful in several situations. Bankrate offers six reasons to stash away a spare card.
- 1. Financial safety: A well-placed backup card can provide crucial flexibility if your wallet is stolen.
- 2. Rewards: Want both cash back and miles, but don’t want to choose? Have one card for each.
- 3. Credit score boost: Your credit score takes an initial hit after opening any new credit line, but by maintaining a reasonable debt to credit ratio over two credit lines, you can actually improve your score over time.
- 4. Staggered bill paying: Ultra-savvy penny pinchers can arrange their cards “so one of his or her credit cards has a billing cycle that ends on the 10th of the month and another that ends on the 25th. If that you pay careful attention, you can use the first card for purchases shortly after the 10th and the second one for purchases shortly after the 25th, maximizing the amount of time in between the purchase and when the bill must be paid.”
- 5. Easier bookkeeping: Save trouble during tax season by keeping all your business expenses neatly itemized on one card.
- 6. Leverage: Bankrate argues that you can use the favorable terms on one card to leverage better terms from other lenders. Threatening to leave for greener pastures doesn’t require a second credit card. In fact, consumers can often receive better terms just by asking.
Bankrate argues in favor of “multiple” credit cards, but let’s not get carried away. Very few people need more than two cards. Regardless of how many cards you have, be sure to pay all of them off in full every single month.
Do you keep more than one card? Tell us how you use the spare in the comments.
6 good reasons to carry multiple credit cards [Bankrate]
(Photo by Jeff J Mitchell/Getty Images)
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I have two cards that offer rewards: One gives 2% on gas, 1% all else, and the other gives 5% cash back on gas for the first $100. 1% after $100.
I never charge more than the cash I have in my checking account. So even if I’m maimed and can’t work, I can still pay off my card. It’s so easy to check nowadays. It takes less than a minute online to do.
Time’s valuable to me. That’s why I see credit cards as a tool to save time and nothing more. But once you start needing them to give you “purchasing flexibility”, that’s when you’re heading into dangerous territory.
The way I see it, if you’re lousy with cash, you’re going to be really lousy with credit. But if you’re responsible, credit cards can save you a lot of time and hassle.
I’m 21, and I have about 12 credit cards. I only use 4 of them regularly. That allows me to maximize my cash back. I get probably around 4% total on all my purchases:
6% on gas, groceries, drugstores (actually 12% for the current year)
5% on restaurants, books, music
3.75% on bills (electricity, internet)
2% on everything else
Also I have about $20k in 0% debt, on which I earn interest.
i have 4-5, and only use one. Cant cancel any b/c i have long histories with all.
I have four cards right now:
-Amex Blue Cash, which I use for almost eveything – great rewards, great customer service.
-Chase Freedom Visa – use it primarily for fast food and at a grocery store I frequent that doesn’t take Amex (3% back on those two catagories)
-Discover Driver’s Advantage – used to give really good gas cash back, but recently changed the rewards structure. I use it for $100 worth of gas every month and that’s it.
-a Citibank mastercard that I never use, I just keep it because I’ve had it since I was 18 and it’s my oldest account.
I have an American Express that my husband and I put EVERYTHING on, groceries, gas, a ton of reimbursed business expenses, you name it. It totals anywhere between $1000 and $5000 a month. We pay it off in full every month. We’ve used their buyer protection plan on a defective Xbox and made $500.00 this year with the 1% reward into a high yield savings account program on this card. So, bdslack, congratulations on your money market fund, but I have my savings in higher yield investments, and I’m enjoying the $500.00 per year I earn on my Amex.
And I had 35% to put down on my house, Captain Condescending.
@BDSlack:
This is going to drop off the first page, so there is really no reason to continue debating about this. I completely disagree with you and thats OK. Different strokes for different folks.
That being said, an additional benefit I didn’t think of: With the airline miles accrued with using my card for all my home remodel purchases this year, I was able to get a round trip ticket to Europe for myself and my fiancee. I can’t complain about that.
I’ve got about 6 cards, and none of them carries a balance. It’s mostly because I sign up for rewards cards and then the bank changes the rewards system after a while – so, I go find another card with better rewards.
@Mrs. Basil E. Frankweiler: You know I didn’t really mean to come off like that. Think of it like TIVO. I just hit the “pause” button for about a year and saved up money. Once that was done, I had more in cash than any credit card would ever give me in credit. I live in the past while most people live 2-3 months in the future.
As a family we do very well, but it is because we don’t use debt. It is difficult to explain to anyone that has not done without credit. I have seen the other side of the fence, but many people have not seen mine.
So to each it’s own, and the grass is always greener. I just can’t imagine the loyalty people express to an industry that destroys countless lives everyday. Cheers to all the people that pay off their cards every month, you are the top 1% of the credit industry. There is a great movie called “Maxed Out” where credit card executives refer to you as “deadbeat customers”.
It is such a heated topic, when friends and coworkers find out that we don’t carry any debt or credit cards we tell them that it is a religious thing. It is much easier and we don’t need to hear the same stories told here on this post, “are you a hermit”, “how do you rent a car”, “what about all the miles”, etc, etc,. I even put a freeze on our FICO accounts so that they would stop sending offers in the mail altogether.
It is amusing how a simple credit card discussion gets people so heated, like you are discussing their own personal money when it is in fact Visa’s money. Anyhow, I’m a very small percentage of the population in America. My apologies if I offended anyone and my comment about a 35% down payment was in regards to the entire world demanding lengthy credit card histories to purchase a house, not as a finger wag to whatever your situation is. You simply need MONEY and an INCOME to buy a house, not lengthy credit card histories.
@bdslack: I’m not offended. I just think that credit cards and credit history is an evil necessity. The one thing about me and credit cards is that I don’t want “rewards” I would want a cheaper interest rate in case something happened (like medical bills, etc.) and I couldn’t pay the full balance off at the end of the cycle. I really don’t have any use for their rewards. I have a medical condition that prevents me from flying.
I have a money market account like my good friend bdslack up there, earning a steady 4%, and a well-balanced checking account with a debit card for emergencies. I’ve yet to run into any financial trouble.
I have three credit cards. A Capital One that I obtained at the age of 18, with a low limit and high APR, and two department stores, one with a high limit and high APR and one with a high limit and low APR. I’m one of those people that does the minimum payment each month until I can scrape enough cash together to pay them in full. Bad, bad, I know. But I’m learning, and by the end of summer all of my three should be paid off.
Oh well. Can’t complain when you’re able to buy your own house at the age of 22.
Ahh, Bankrate. Fine purveyors of financial ineptitude.
# 1. Financial safety: A well-placed backup card can provide crucial flexibility if your wallet is stolen.
Well placed cash can’t do the same?
# 2. Rewards: Want both cash back and miles, but don’t want to choose? Have one card for each.
Yes, rewards – that great incentive to spend, spend spend, spend….
# 3. Credit score boost: Your credit score takes an initial hit after opening any new credit line, but by maintaining a reasonable debt to credit ratio over two credit lines, you can actually improve your score over time.
What a great beacon of of personal finance advice to implore readers to to go into debt to boost an unneeded debt-worthiness score. Nice work guys.
# 4. Staggered bill paying: Ultra-savvy penny pinchers can arrange their cards “so one of his or her credit cards has a billing cycle that ends on the 10th of the month and another that ends on the 25th. If that you pay careful attention, you can use the first card for purchases shortly after the 10th and the second one for purchases shortly after the 25th, maximizing the amount of time in between the purchase and when the bill must be paid.”
Why are we maximizing the amount of time in between the purchase and when the bill must be paid? It wouldn’t be because we’re spending money we don’t have, is it?
# 5. Easier bookkeeping: Save trouble during tax season by keeping all your business expenses neatly itemized on one card.
Separate checkbooks or debit cards achieve the same goal.
# 6. Leverage: Bankrate argues that you can use the favorable terms on one card to leverage better terms from other lenders. Threatening to leave for greener pastures doesn’t require a second credit card. In fact, consumers can often receive better terms just by asking.
So this is or is not a 6th reason? Looks like a no to me.
So what’s next, Bankrate? 12 good ways to line your local bank’s pockets? 34 reasons why sub-prime is A-OK!?