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When Should You Get an Additional Credit Card?

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While having a Credit Card has become a no-brainer in this day and age, the real question is whether you need an additional Credit Card as well? While there are several good reasons why you should get yourself an additional card, there’s this constant looming fear that getting another Credit Card can prove to be a recipe for disaster. On the contrary, a second card can help you in more ways than one.

Listed below are a few reasons why you should seriously consider getting yourself a second Credit Card if you haven’t already done so:

  1. Improve your Credit Score

One of the primary benefits of having more than one Credit Card is that it helps in Improving your Credit Score. Simply put, when you apply for an additional card, it will increase your available credit. This, in turn, will reduce your Credit Utilisation Ratio, which could help boost your credit scores. For instance, if you have a single Credit Card with a credit limit of Rs. 50,000 and you have utilized 30 percent of the limit (spent 15,000) then your Credit Utilization Ratio would be 30%. However, if you get an additional card with the same credit limit, it opens the total credit available to you which, and impacts your Credit Utilization Ratio positively. Your Credit Utilization Ratio would drop to 15% – with all things being equal – which also helps in raising the CIBIL score.

That said, it’s important that you pay your balance whenever it’s due on your first Credit Card. For, availing a second Credit Card is entirely dependent on whether you have been paying the balance on the first one on time. Another important thing to note before applying for Online Credit Cards is that you should do so only once you have built up your Credit Score to respectable levels. Every Credit Card application which you fill and submit negatively impacts your Credit Score and filling up several applications at once might prove to be counterproductive.

  1. Backup in case of emergencies

A second Credit Card can come in handy, especially in case of unforeseen scenarios or emergencies. There are chances that you might have lost your card– either through theft or you could have misplaced it somewhere. In either situation, a replacement card may take up 72 hours to process. While, this waiting period might be acceptable to you when you already have an additional Credit Card, in case you’re out on holiday abroad, this loss could cause a severe hindrance to say the least. If you have an additional card, rest assured you won’t be left without means of payment if your card is lost.

Another scenario could be that your card has been rejected for payment or your card’s network has been compromised or is down. IT failures aren’t uncommon, which entails that you will be unable to use the card for the entirety of the time when your Credit Card Company experiences downtime. Having an additional card in such a scenario can avoid unnecessary hassles on that front.

  1. Diversify card benefits

Different vendors– Visa, Amex, MasterCard & more– have their range of benefits. For instance, there are certain benefits which are accessible only in the event you hold a Visa Card while alternatively, other rewards might open up if you hold an Amex Card. Then, there might be the odd chance that when you travel abroad, certain establishments only accept one type of card, which is why it makes sense to carry multiple cards.

  1. Higher Credit Limit

Applying for a second Credit Card automatically increases the available credit limit at your disposal. A higher credit can help in paying for any large purchases or allow you to spend luxuriously while out on holiday. The last thing you want is your holiday getting ruined because you didn’t have enough limit on your card to service your request. Moreover, a higher credit limit also helps in lowering your overall Credit Utilization Ratio.

  1. Access to better rewards

Is your current Credit Card offering you the best possible rewards? Maybe you’re a frequent flier, and your Credit Card doesn’t provide complimentary Lounge Access. In other cases, maybe you’re looking for dining discounts at your favourite restaurants – something unavailable on your current card. With every passing day, Credit Card companies are packing their card offerings with a plethora of benefits and rewards which are lucrative. A second Credit Card can help you gain access to those exciting rewards and benefits. Then there are cards which offer generous sign-up bonuses and rewards as well, which makes getting the second card worthwhile.

Just make sure to shop around and check out which rewards align with your interests and purchase habits before making the call. For instance, certain SBI Credit Cards offer free movie tickets worth Rs. 6,000 annually which can prove to be beneficial if you’re a movie buff.

Similarly, certain HSBC Credit Cards allows you to enjoy a 15 percent discount at select partner restaurants which will work in your favour if you love eating out often. Accordingly, choose the Credit Card, which matches your preferences and stands to benefit you in the long run.

  1. To avail a lower interest rate

It’s quite likely that your current Credit Card is your first Credit Card which might be charging you a higher rate of interest. Applying for a second Credit Card might make sense in this case, especially if you can avail a lower interest rate. In such a scenario, you can even consider transferring your balance to the second Credit Card with lower interest and save on the total interest pay-out. This will help by not only ensuring you save money on interest but also in paying back your overall debt faster. That said, a word of caution would be not to make balance transfer a regular occurrence as it can easily lead you into a vicious cycle of debt.

The Bottom Line

Once you’ve analysed your situation and figured that you need an additional Credit Card, you will soon realise that having a second card can be a boon. To derive maximum benefit from your cards, ensure to make all your payments before the due date while also keeping an eye out on your Credit Utilization Ratio.

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