Credit Card Tips: Should you carry one card for all purposes or different cards for different purposes?

Credit card use is common among modern salaried and non-salaried people. Not just in Tier-1 cities, but people in Tier-II and Tier-III cities and small towns are also using credit cards regularly. Credit card use provides one with the facility to purchase a thing even if they don't have hard cash at that point in time. They can purchase a thing by making an entire payment or instalments. Another important factor that has encouraged people to use credit cards is the multiple promotional offers available on them. Sometimes, when we open our salary account or when our Cibil score is sound, banks offer us lifetime free credit cards. We consider it a lucrative offer and think, what's the harm in taking a lifetime free card even if we are not using it?

Well! If you have more than one credit cards and are not using them regularly, that's a point that may bother you in the future.

Credit cards should be used responsibly. Neither one should delay the bill as it may invite a heavy monetary penalty, nor should they leave their card unused. 

Aditya Gupta, CEO, Credilio, says that if you leave a lifetime free credit card unused for some time, it may negatively impact one's credit score (Cibil score).

"While one's credit score can be affected, non-usage can also invite dormancy fees. Not all, but some cards charge fees for inactivity," said Gupta.

In contrast, we have different credit cards for different purposes. We have one card for grocery shopping, another for purchasing food, one for fuel, and another for seasonal sales.

Apart from that, many online shopping apps, such as Amazon and Flipkart, also have their own dedicated cards that give concessions to their customers.

Shouldn't we keep cards for certain occasions and not use the same card for all our purchases? 

Gupta says that one should gauge their requirements before deciding how many cards they want to have.

Apart from that, they should also make the decision to own more than one card, depending on their spending habits.

"One-size-fits-all is not the answer. If you have one card, it is simpler to manage, and some cards offer reward points across categories. However, multiple cards can maximise rewards for specific purchases (e.g., a travel miles card for travel). However, it requires responsible management to avoid overspending and fees."

People in higher income brackets sometimes opt for more than one credit card.

They think that since they have a higher income, they can manage to have multiple cards.

However, that may not be a wise thought, as having too many cards with high credit utilisation also raises an alarm about your creditworthiness. 

"The number of cards itself doesn't directly correlate to your income. However, lenders might consider it during credit card approval. Having too many cards with high credit utilisation could raise a red flag about your ability to manage debt."

Credit card utilisation ratio is the amount of revolving credit you're using divided by the amount of revolving credit you have available. An ideal credit card utilisation ratio is 30 per cent.