With there being a range of credit cards available, it can be difficult to choose the right card. Making that task more difficult is the fact that every card has pros and cons. Indeed, there is unlikely to be a ‘one size fits all’ solution for any individual.
As a result, it may be worth having more than one card. Depending on personal circumstances, this could take the form of a rewards or cashback card for everyday use, as well as a card that does not have a non-sterling transaction fee for international usage. For other consumers, having a balance transfer card or a card that offers 0% on new purchases may be more logical than having a rewards card or a card that does not charge non-sterling transaction fees.
By having two cards, an individual may be able to benefit from the ‘pros’ that credit cards offer, while missing out on their possible ‘cons’.
Day-to-day card For many consumers, a rewards or cashback card could be the best way to make day-to-day purchases. Cashback cards such as the American Express (NYSE:AXP) Platinum Everyday Cashback Card and the Tandem Cashback Card could yield high levels of cashback over the course of the year. For example, at the time of this writing, a consumer spending £5,000 per year on the two cards could receive cashback of £50 and £25 per annum respectively.
Likewise, reward cards offer appeal for day-to-day use. It is possible to obtain vouchers and discounts for specific stores, which may prove more valuable to some consumers over others depending on which retailers they frequent. Some credit card issuers, such as RBS (LON:RBS), offer boosted rewards for specific retailers, which could make their credit cards even appealing for some consumers.
As such, having a rewards or cashback card for everyday use may allow an individual to maximise their total benefits during the course of the year. Doing so could have an impact on their overall financial situation.
Second card Having a second card could be logical move for consumers in a variety of situations, for example if they travel internationally on a regular basis. In this situation, many reward or cashback cards would be unappealing, since they often charge a non-sterling transaction fee. Having a second card with no such fee could be a means of maximising the overall savings each year.
Similarly, consumers may have existing debt on a credit card. Obtaining a balance transfer card could therefore be a logical idea, since it will allow them to pay 0% interest on the debt for a set period of time – often up to 32 months. Likewise, consumers who know they are likely to make a large purchase in the near future may want to obtain a card that offers 0% interest on new purchases.
Takeaway While having multiple credit cards can complicate an individual’s personal finances, doing so may also help to improve their financial situation over the long run. A cashback or reward card for everyday use could maximise their total benefits during the course of the year. Meanwhile, a second credit card that reduces fees when travelling internationally or reduces the interest rate when repaying debt or making large purchases could also be a worthwhile idea.
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