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Why Two Credit Cards Are Better Than One

by Barbara Marquand

With all the warnings about the evils of too much credit card debt, you might figure the fewer the credit cards you have, the better, but that's not entirely true.

Certainly, there's such a thing as too many credit cards. How many is too many? There is no precise number, but if your wallet is thicker than a paperback bestseller, and you're having trouble keeping track of umpteen different due dates and balances, then you know you've passed the threshold.

Yet, that doesn't necessarily mean you should have just one credit card. Here are three advantages a second credit card can provide:

1. Emergency Credit

If you lose one of your credit cards or it gets stolen, it's nice to have a backup while you wait for a new replacement card to be issued. This is especially the case when you're traveling. Keep your second credit card locked in the hotel safe. Then if your wallet gets stolen, you can use that card to cover expenses. Even if your second credit card is just for backup, make sure you charge something small on it once a month to keep the account active. Otherwise the credit card issuer might cancel the account, and merchants won't honor the card.

2. Potential for a Better Credit Score

Part of your credit score is based on the percent of available credit you use. With a second credit card, your available credit goes up, and you can spread your balances between the two accounts, lowering your credit card use compared to available credit. Say, for instance, you have one card with a $5,000 credit limit and you carry a $2,000 balance. Your credit usage is 40 percent of the limit. But if you put half the balance on a second card with a $5,000 limit, your credit usage would be only 20 percent. Experts advise to keep your balances on all of your cards below 30 percent of their credit limits.

3. Credit Card Alternative

A second credit card provides an alternative in case a merchant doesn't honor your primary credit card. You might like the cash-back credit card rewards that Discover offers, for instance, and want to use that card as your primary account. But not all merchants accept Discover, so a second credit card, a MasterCard or VISA, for example, could serve as an alternative.


Published 03/07/11 (Modified 07/09/14)

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