Ask Chuck: One or many credit cards?
Dear Chuck,
My spouse thinks we need another credit card. We’ve been getting by just fine with one. Who do you agree with?
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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 an 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 running up debt, and 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.
Backup card
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.
Earn rewards
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.
Balance transfer
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.
Emergencies
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
- Annual Fees
- Easy to overspend
- More to organize
- Credit checks when opening a new card
Manage your cards
Watch your balances, and investigate alerts. Record your number in a safe place along with a contact number/website in the event of loss or theft. Devise a system that notifies you when payments are due.
Credit card companies make money by charging high-interest rates and late fees. Avoid getting trapped in an endless cycle of debt by carrying balances. Do not attempt to open multiple cards within a short time frame because it can damage your credit score.
Lenders like to see a long credit history, so think before closing an old card. Inactive cards may be closed which can damage your credit score as well. Check your credit report regularly. Look for errors, and fix them quickly. You can request a free copy from the 3 reporting agencies.
Pay on time, and don’t overspend. Let these verses be your guide:
“The rich rules over the poor, and the borrower is the slave to the lender.” (Proverbs 22:7 ESV)
“Pay to all what is owed to them: taxes to whom taxes are owed, revenue to whom revenue is owed, respect to whom respect is owed, honor to whom honor is owed.” (Romans 13:7 ESV)
So this is my revised position! Ann and I are in agreement to open another credit card account. My hope is that this will be helpful to you and your spouse as you seek to unify your preferences.
If credit card debt is a source of pain for you or someone you know, Christian Credit Counselors is a trusted source of help toward financial freedom.
Chuck Bentley is CEO of Crown Financial Ministries, a global Christian ministry, founded by the late Larry Burkett. He is the host of a daily radio broadcast, My MoneyLife, featured on more than 1,000 Christian Music and Talk stations in the U.S., and author of his most recent book, Economic Evidence for God?. Be sure to follow Crown on Facebook.
