My spouse thinks we need another credit card. We’ve been getting by just fine with one. Who do you agree with?
Divided Over Credit Cards
Dear Divided Over Credit Cards,
It is not wise to step into the middle of a dispute without hearing both sides. So my first reaction is to recommend that you find agreement with your spouse apart from a third party arbitrator like me. Since I have recently been through a similar discussion with my wife, Ann, it will be easy to share our journey that may help the two of you get united.
One Card or Many Cards?
It has been my position and practice for years to have only one credit card. There are lots of benefits to this practice: racking up bonus miles, less vulnerability to run up debt, easier to track one account, to name just a few.
Someone recently stole our credit card number. We received an alert and initially thought it was a scam. Upon returning home, we checked our online account. Sure enough, someone was having fun shopping at Nordstrom’s in a completely different part of the country.
My position on having just one card has officially changed! If you are a responsible spender, pay your bill in full each month, or maintain a very low balance, you should consider a second credit card—not many credit cards, just two! The average American has four cards; some have many more. Manish Dhameja of India holds a Guinness World Record for 1638 cards in 2021.
A backup card is important in the event you lose a card or, like me, have your account number stolen. Until my replacement card is received, I am forced to use cash or a debit card. I do not like this option, especially when traveling. So before you read on, be sure and see my qualifiers above. If—only if—you meet those conditions, having two cards has multiple benefits.
Access Different Networks
Visa, Mastercard, Discover, and American Express are the four payment networks. Visa and Mastercard are widely accepted, Discover finds acceptance in the United States but not internationally, and American Express has the lowest acceptance globally. It is suggested that you carry cards from different networks.
Combine cards to earn higher rewards on your spending. Analyze the rewards offered by cards to maximize your returns. Cards vary. Some offer rewards for travel, cash back, or zero interest.
Your spending habits will influence your decision. We like to earn travel miles on our cards.
Reduce Credit Utilization Ratio
How much credit you are using impacts your credit score. Lenders like to see you are not maxing out your available credit. Another card can reduce your ratio (balance-to-credit limit) by spreading your purchases over multiple cards. This increases your credit score unless undisciplined spending is an issue.
You can save money by moving the balance of a high-interest card to one with a low rate. Just make sure you read the fine print to avoid penalties and fees.
Two cards can prevent a large expense from hurting your credit score. It can also help if you reach a limit on one card in a time of distress. Just make sure you have the means to pay them off, or the penalties will far outweigh any rewards/benefits.
The Negatives of Two or More Cards
Easy to overspend
More to organize
Credit checks when opening a new card
This article was originally posted on The Christian Post on July 29, 2022.
Subscribe for Weekly Updates
"*" indicates required fields
Christian Credit Counselors
Is credit card debt causing you stress and strain? Christian Credit Counselors would like to help!