Does it Make Sense to Get a Second Credit Card?

Once you have learned how to use a credit card wisely and are cognizant of the multitude of benefits it has to offer, you may be tempted to get a second one. Before you take this plunge, there are two issues that you must consider. Firstly, you need to figure out what you hope to gain from the second card. Secondly, you need to ensure that you are applying for the card at the correct time. If your reasons for obtaining a second card aren’t satisfactory, or if you apply for the card at the wrong time, you may end up being disadvantaged in the long run. To save you from this predicament, we’ve compiled a comprehensive summary here.

What are the possible benefits of a second credit card?

Firstly, a second credit card acts as a back-up in case the first one is lost or stolen. Ideally, you should keep it in a place other than your purse or wallet, so that it remains handy even if you become a victim of theft or loss.

Secondly, demonstrating responsible behavior with multiple credit cards serves to enhance your credit rating and can even help you qualify for a mortgage or a car loan in the future. A second card also increases the total amount of credit available to you - which in turn improves your credit utilization ratio (i.e., your used credit divided by your total available credit), thereby boosting your credit score.

Many consumers opt for another card as it gives them the opportunity to transfer their balance from a higher interest card to a lower interest card. A number of cards offer introductory low or even 0% APR for a period of 6 – 18 months; these give cardholders the opportunity to pay their debt down faster.

A second card is a great way to rack up rewards. For example, if your first card offers you 2% cash back on all purchases, and your second card gives you 5% on all gas and grocery purchases, you can maximize your cash back by using one card for gas and groceries and the other for all other purchases. Or, if your cash back card has a limit of how much cash you can get back in a year, you can use a second card once you’ve reached the cash-back limit with your first.  

Lastly, getting another card allows you to establish a relationship with a second financial institution. So in case you are not satisfied with the first bank’s service, you can always approach the second card company.

When is the best time to get a second card?

Any time is a good time to get a second card if it will help you save money. Nevertheless, you must ensure that:

• It has been at least six months since you’ve got your first card, as that is how long it takes for an account to impact your credit history. Moreover, applying for multiple cards within a short time can result in hard inquiries - which in turn may affect your credit score.
  
  
• You can manage another card – if you’ve not been able to pay your bills in full and on time for the first card, it’s unlikely that you’ll be able to do so for the second one. In this case, applying for a second card will only complicate your life and may even get you into deep debt.
  
  
• You will actually use the card – an inactive card doesn’t offer many benefits to a consumer and may even be closed by the issuer. So if you apply for a second card, make sure you use it somewhat regularly and pay it off every month – this will additionally help you improve your credit score.

So we’ve seen how getting a second credit card can prove to be quite beneficial in certain cases. But what about a third credit card, or even a seventh or eighth one? Often, consumers apply for three or four credit cards at one go since they hope to utilize the collective card limit for some specific purpose, such as funding their business or for making the down payment on a property. In such cases, low credit limits offered by one or two credit cards may not be enough to meet their goal. But how much will card issuers advance you? And what are the downsides? 

If you are thinking about such action, you need to talk to the experts at Fund&Grow! We can guide you around the pitfalls. Our team helps clients with good credit obtain $50,000 - $250,000 of unsecured credit at 0% interest. For a flat fee, we not only guide you through the entire process, but also take care of most of the paperwork for you. So if you need this kind of funding, call us at (800) 996-0270 and we’ll help you out right away!