Do I need two credit cards?


Do I need two credit cards?

Do you regularly notice letters drop through your door with offers to take on a new credit card – even though you have one? Even if you haven’t been offered a second card, so many come with tempting incentives that it can be difficult to ignore them. But do you need two credit cards?

The simple answer is no, you don’t need two credit cards. It may seem very tempting when lenders are offering you a new card, but unless the card offers something you don’t currently have the benefit of and you can afford the repayments, try sticking to one card. 

With two cards, you need to manage separate statements, usually with different payment dates. If you don’t stay in control of your finances, it’s easy to lose track of your spending and this will put pressure on you and could also eat into your monthly household budget.

Should I have two credit cards?

In theory, there is nothing wrong with having more than one credit card. It’s important you stay on top of your minimum monthly repayments so you don’t risk damaging your credit history. But the more credit cards you have, the more you are juggling various statements and payments.

If your income isn’t going up, taking out a new credit card and spending on it will mean you have more outgoings to budget for from the same income. This puts you at risk of missing payments, which will result in damage to your credit history.

Even if you don’t plan to use your existing credit card as much when you take the new one out, this could still create difficulties when you apply for a second card. A lender might wonder why you have access to thousands of pounds that you don’t use, but are still applying for further credit.   

However, not all credit cards are the same and you might be keen to take out a second because it offers something your existing card doesn’t. So, if you have a healthy credit history and are considering taking out a new card, which do you choose? Well, simply decide what it is you get from your present card, the benefit expected from a new card and what it will be used for. There are many cards out there offering various incentives.

Rewards and cashback cards

These cards give you rewards or cashback based on your spending. They are aimed at customers with positive credit histories who have shown they’re able to manage the credit they have available to them. If you know you can cover the balance of several cards each month, rewards and cashback could be an incentive.

But be aware that these cards can come with an annual fee attached to them in exchange for these perks, so you must be sure that the rewards outweigh this. If you don’t need air miles, don’t get a credit card that rewards you them in exchange for a fee!

Low APR cards

Cards with a low APR are typically available to borrowers with the best credit histories. They provide customers with one of the cheapest ways to borrow as the interest rate is so low.

However, if you are eligible for a credit card with a lower rate of APR than the one you’re currently using and are keen to apply, you should ask yourself whether you need to hang on to your old card when your new one arrives. It might be best to close your existing credit card instead so that you have the benefit of lower interest on all your purchases. And remember, if you clear your balance in full each month, you won’t pay any interest anyway!

0% balance transfer cards

This card is designed for you to transfer the balances of your existing credit and store cards over so you make just one payment each month instead of several. Some balance transfer cards come with a 0% interest period, which means you don’t have to pay any interest on your repayments – as long as you make at least the minimum repayment every month.

Sounds simple! But be aware there is often a fee to transfer over the balance of your existing credit cards. And the 0% period does not last forever. Make a note of the date it runs out, as you will then switch over to your lender’s standard variable rate (SVR), which can be very high. You should do your best to clear your balance by this date.

0% on purchases cards

This card also offers a 0% interest period, this time on purchases. Again, these cards are usually available to borrowers with the best credit histories.

The length of your card’s 0% period depends on the lender and the deal, and once it’s over you will pay the lender’s SVR. If you are planning to make a large one-off purchase you then pay back in monthly instalments, this card can be a good option – just remember to finish paying it off before your 0% window closes.

Credit cards and credit history

One of the things lenders look at when you apply for a credit card – or any form of borrowing – is your credit history. This shows them all the lines of credit you have available to you and how you’ve managed them. They use this record to help determine whether you will be a responsible borrower, and whether you can afford more repayments on top of the credit you already have.

Some lenders will not only consider how much credit you’re spending, but also how much you’d have available to you if you were to max out every limit. So, if you have one credit card and apply for another, a lender might look at whether you could afford their card if you were paying interest on the maximum allowance of the card you have – even if you have no intention of spending this much. This may therefore make applying for multiple credit cards tricky.

Responsible lending

Ultimately, only you know if the benefit of a second card outweighs the extra responsibility and budgeting required to manage your repayments. So before you decide to take out a new card, make sure you are applying for the right reasons and not just because the lender has offered it to you.

For more information on credit cards and credit history, visit our blog.