Should I get another credit card? The pros and cons of having multiple credit cards

Finding yourself tempted to add another credit card to your wallet? Before you do, there are a few important pros and cons to consider to decide whether it is worth your extra time – and the potential impact to your bank account.

Multiple credit cards: The good, the bad, and the ugly

With the cost of living continuing to rise, it’s easy to find yourself putting more money on  credit cards and Buy Now Pay Later. In fact, Reserve Bank payments data shows that credit card spend reached a to-date high in January 2023. However, the answer may not be to get another credit card.

Pros of having more than one credit card

• Play the points game: Without going overboard, having more than one rewards card can allow you to access multiple points and rewards schemes in order to maximise on promotions and discounts. For instance, if you are booking a holiday on Qantas, you might want to prioritise a card with Frequent Flyer points. With certain vendors, you might get cashback on your groceries, so you could use a different card there. As long as you are on top of your spending, this could be a very rewarding strategy.

• Access to extra features: Having more than one card can allow you to take advantage of certain features that another card might not have – for example if you are travelling, travel cards with airport lounge access or no foreign exchange margin on foreign transactions. 

• Can be used to help your credit score: If you’ve got a negative mark on your credit history or want to improve your credit score, the careful management of a couple of credit cards can be one way to boost your credit score. You’ll have to be stringent with your spending and pay back your cards with vigilance, but paying back your cards will show the banks that you can make repayments in a timely and consistent manner.

• Useful for emergency situations: While a credit card is not an ideal method of paying for an unexpected expense, it does allow you quicker access to payment than most personal loans. A backup credit card can be used in the event that another card is compromised, stolen, or lost – less of a necessity in the age of mobile wallets – but can provide some extra peace of mind.

Cons of having more than one credit card

• Debt can snowball: With multiple sources of credit can come multiple sources of debt. This can be hard to stay on top of, particularly if you aren’t an organised person by nature. While we do have a guide to staying on top of credit card debt, the difficulty level goes up each time you add in another credit card – so think carefully before adding one to your wallet.

• Keeping track of multiple repayments: It’s confusing enough to keep up with paying the phone bill, the energy bill, the rent or mortgage and all the other regular repayments. One credit card statement throws something else into the mix, but multiple credit cards is a whole extra layer of disorganisation. Get ready to do some hardcore scheduling, or risk losing track of when money is going in and out of your bank account.

• Can negatively impact future borrowing power: Like with any form of debt, what starts as a small amount of credit can very quickly leave a lasting impact on your credit score and make a difference to how much you can borrow in the future. Greater monthly repayments from more credit cards will also eat into your borrowing power, meaning those extra bills can have far-reaching consequences.

• Can be confusing: Apart from the confusion of when you need to pay off each card, juggling multiple rewards schemes or balance transfer deals can be a genuine head-scratcher. Spending on the wrong card could risk you missing out on rewards you were planning to benefit from, or could incur an unexpected transaction fee, for example.

Tips for staying on top of multiple credit cards

If you do decide to add another credit card to your wallet, it’s important that you stay on top of your spending and are timely in your repayments. We’ve added in some useful tips to help you in managing multiple cards.

• Only keep cards you’re using. While there can be some benefit to having multiple cards, this is not an area for hoarding. If a credit card isn’t serving you well, ditch it. Stick to cards where you know what benefits you’re getting, and you can justify their spot in your spending. 

• Schedule your repayments (and mark them in your calendar). To help keep track of multiple repayments, pencil your monthly days to remember in your calendar (or add them to your phone, however you work). That way, you can plan around them, and know when you’ll need to be prepared in order to pay on time. This can help you avoid costly interest and any unnecessary late fees. If you can schedule things to be around the same day, preferably near pay day, you’ll be even further ahead of potential obstacles.

• Plan your purchase method in advance. Rather than getting to the cash register and pulling out the card that feels right, think about which credit card you’ll be using in advance of your purchases. If you’re working towards a certain point goal, prioritise spending on the relevant card. If there’s a double-points promotion on, plan to take advantage of a specific card during the promotional period. Eliminating the chance to make snap decisions takes out the risk of putting things on the wrong card.

• Ask for help earlier rather than later. If you feel yourself starting to slip in terms of credit card payments, or are worried you won’t be able to keep on top of things, it is already time to ask for help. If you wait until you have slipped behind, it can be very hard to climb back on top. Contact your credit card provider for help in cancelling your card and receiving necessary assistance.

Before you take on any new credit product, remember to do your research first to understand how it might help or hinder your money management.

If you are interested in some standout credit cards, check out Mozo’s Best Credit Cards.