Since consumers learned the hard way over the past few months that credit card issuer policies are very unpredictable
, more and more consumers understand the need to diversify their credit card accounts, not unlike what they are doing with their investment portfolios.
By diversifying your credit card accounts, you are helping to ensure that should something go amiss with one of your cards, you won’t be left holding the bag with no access to credit. Many consumers have felt the sting of this reality recently with card issuers closing accounts en masse and tightening up their lending practices so significantly that even creditworthy customers are unable to gain access to credit these days. With the recent wave of account closures, those that had several credit card accounts with different issuers didn’t feel the pinch nearly as much because they had more resources to work with at the time.
Granted, having 100 different credit cards in your wallet is not the smartest financial move but there is something to be said about having 3-4 reliable cards that also offer additional perks and benefits, such as cash back offers, discounts on purchases, miles rewards, and other card advantages. Having more than one card with more than one issuer can help in many different scenarios. For instance:
- You have extended options should one card company decide to take radical measures like slashing your credit limit drastically.
- If one of your credit cards is lost or stolen and used fraudulently, you are not without a credit card for your needs.
- You can assign different cards for different uses such as one for online use only, one for every day purchases, one for gas purchases, and so on. This can help you manage your expenses and budgeting each month.
- In addition to better bill management, having several cards is good for frequent travelers that may be at higher risk for losing a credit card.
- You have the option of getting more rewards from your purchases, since different cards offer different programs.
- You may choose to use a balance transfer card to help consolidate and pay down your debt, in additional to the card you use for your regular purchases.
- If your oldest credit card does not offer the benefits and rewards programs as newer cards will, it would help to apply for a better card while keeping your oldest account open for credit score purposes.
- With increased monitoring for fraudulent activity by card issuers, there may be an occasion when your card issuer puts a hold on your account citing “suspicious” activity, even though the purchase activity is perfectly legitimate. Having access to other cards in this situation provides security and peace of mind.
- While it is never wise to max out a credit card, there are some instances where true emergencies arise and you need some wiggle room to take care of an unforeseen situation. If you only have one credit card, you again have no back up plan which can be crucial during an emergency.
While many consumers don’t like the idea of any credit card product these days, the reality is that credit cards by themselves are not the enemy. Consumers who are not prepared or capable of controlling their own spending shouldn’t have or use credit cards, bottom line. Those who are experienced using credit and understand the importance of good credit and how to use it responsibly can benefit greatly from diversifying the very best credit cards.
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