What are the pros and cons of having multiple credit cards?

Many people love the convenience offered by credit cards. Rather than saving up cash over time to make a purchase, you can use your card to buy right now.

So, if one credit card is convenient and useful in the right circumstances, what about two credit cards? Or three? Or more?

While there may be some benefits to having multiple credit cards, there are also several potential drawbacks to consider before applying for extra cards.

Pros of multiple credit cards

Access more bonus offers

Some lenders offer special introductory offers and incentives to new credit card customers, such as discounted interest rates, bonus reward points, and other free gifts. If these bonus offers appeal to you, and you’re satisfied with the terms and conditions involved, you may enjoy additional benefits by applying for extra credit cards.  

Earn more reward points

By matching credit card reward programs with your spending, it may be possible to build up more reward points than you typically would with a single credit card.

For example, if one card earns the most points when paying for travel, while another earns more points from supermarket shopping, splitting your spending between these cards could allow you to reap more rewards in total.

Manage expenses separately

They say that if something can be measured, it can be managed, including spending. Multiple credit cards can allow you to separate different type of spending, such as spending for work, home, and travel, by putting each onto a separate card. Having separate bills for each spending category can help you to simplify your household budgeting.

Backup for emergencies

Having your wallet lost or stolen can be a painful experience, as it means cancelling and replacing all your debit and credit cards, identification, and other assorted paraphernalia. Leaving a spare credit card (a fee-free credit card, if possible) tucked away in reserve at home can prove helpful in a scenario like this, providing a relatively simple way to manage your money until you have everything back on track. 

Cons of multiple credit cards

Risk of overspending

If you were to max out multiple credit cards, you could potentially end up in far more debt than you would with a single credit card.

While being able to borrow more money may seem like more of a pro than a con at first, this could leave you unable to easily afford your credit card repayments, making escaping your debt much more difficult.

Multiple fees and interest charges

Several credit cards, especially cards offering rewards programs and similar benefits, charge annual or ongoing fees. Having multiple sets of these cards can mean being slammed with several fees each year, for bonuses and rewards that you may not always get to enjoy.

Plus, almost all credit cards charge interest on purchases. While paying off your purchases within a card’s interest free period (if it has one) can help you sidestep these interest charges, spending with multiple cards means running the risk of having to pay multiple interest charges, rather than being charged just the once.

Trickier to manage

Having one credit card means paying one credit card bill, but having multiple cards means managing multiple bills, which can be more challenging. While it is possible to set up automatic payments and direct debits to handle some of this for you, just one late repayment can see you slugged with interest charges. And if you start missing payments altogether, you could find yourself looking at a default, which could prove devastating for your credit rating.

Harder to get loans

If you want to borrow money with the help of a car loan, personal loan or home loan, lenders may be less likely to approve your loan applications if you already have outstanding debts owing. After all, it would be irresponsible to lend more money to someone already struggling to repay debts. 

Because a credit card effectively serves as a flexible line of credit, some lenders will assess your loan applications on the assumption that tomorrow you might go out and max out your card debt. If you have multiple credit cards, you could potentially borrow much more money, and get into much more debt trouble, meaning some lenders may be more likely to reject your loan application.

Compare credit cards