What are the pros and cons of having multiple credit cards?

Many people love the convenience offered by credit cards. Rather than saving up cash over time to make a purchase, you can use your card to buy right now.

So, if one credit card is convenient and useful in the right circumstances, what about two credit cards? Or three? Or more?

While there may be some benefits to having multiple credit cards, there are also several potential drawbacks to consider before applying for extra cards.

  • Access more bonus offers
  • Earn more reward points
  • Manage expenses separately
  • Backup for emergencies
  • Risk of overspending
  • Multiple fees and interest charges
  • Trickier to manage
  • Harder to get loans


Pros of multiple credit cards

Access more bonus offers

Some lenders offer special introductory offers and incentives to new credit card customers, such as discounted interest rates, bonus reward points, and other free gifts.

If these bonus offers appeal to you, and you’re satisfied with the terms and conditions involved, you may enjoy additional benefits by applying for extra credit cards.  

Earn more reward points

By matching credit card reward programs with your spending, it may be possible to build up more reward points than you typically would with a single credit card.

For example, if one card earns the most points when paying for travel, while another earns more points from supermarket shopping, splitting your spending between these cards could allow you to reap more rewards in total.

Manage expenses separately

They say that if something can be measured, it can be managed, including spending.

Multiple credit cards can allow you to separate different type of spending, such as spending for work, home, and travel, by putting each onto a separate card.

Having separate bills for each spending category can help you to simplify your household budgeting.

Backup for emergencies

Having your wallet lost or stolen can be a painful experience, as it means cancelling and replacing all your debit and credit cards, identification, and other assorted paraphernalia.

Leaving a spare credit card (a fee-free credit card, if possible) tucked away in reserve at home can prove helpful in a scenario like this, providing a relatively simple way to manage your money until you have everything back on track. 

Cons of multiple credit cards

Risk of overspending

If you were to max out multiple credit cards, you could potentially end up in far more debt than you would with a single credit card.

While being able to borrow more money may seem like more of a pro than a con at first, this could leave you unable to easily afford your credit card repayments, making escaping your debt much more difficult.

Multiple fees and interest charges

Several credit cards, especially cards offering rewards programs and similar benefits, charge annual or ongoing fees. Having multiple sets of these cards can mean being slammed with several fees each year, for bonuses and rewards that you may not always get to enjoy.

Plus, almost all credit cards charge interest on purchases. While paying off your purchases within a card’s interest free period (if it has one) can help you sidestep these interest charges, spending with multiple cards means running the risk of having to pay multiple interest charges, rather than being charged just the once.

Trickier to manage

Having one credit card means paying one credit card bill, but having multiple cards means managing multiple bills, which can be more challenging.

While it is possible to set up automatic payments and direct debits to handle some of this for you, just one late repayment can see you slugged with interest charges.

And if you start missing payments altogether, you could find yourself looking at a default, which could prove devastating for your credit rating.

Harder to get loans

If you want to borrow money with the help of a car loan, personal loan or home loan, lenders may be less likely to approve your loan applications if you already have outstanding debts owing. After all, it would be irresponsible to lend more money to someone already struggling to repay debts. 

Because a credit card effectively serves as a flexible line of credit, some lenders will assess your loan applications on the assumption that tomorrow you might go out and max out your card debt. If you have multiple credit cards, you could potentially borrow much more money, and get into much more debt trouble, meaning some lenders may be more likely to reject your loan application.

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Learn more about credit cards

Can a pensioner get a credit card?

It is possible to get a credit card as a pensioner. There are some factors to keep in mind, including:

  • Annual income. Look for credit cards with minimum annual income requirements you can meet. 
  • Annual fees. If high fees are a concern for you, opt for a card with a low or $0 annual fee. 
  • Interest rate. Make sure you won’t have any nasty surprises on your credit card bill. Compare cards with a low interest rates to minimise risk.

How easy is it to get a credit card?

For most Australians, there are no great barriers to applying for and getting approved for a credit card. Here are some points that a lender will consider when assessing your credit card application.

Credit score: A bad credit score is not the be all and end all of your application, but it may stop you being approved for a higher credit limit. If your credit score is less than perfect, apply for the credit limit that you need, rather than the one you want.

Annual income: Most credit cards have minimum annual income requirements. Make sure you’re applying for a card where you meet the minimum.

Age & residency: You need to be at least 18 years old to apply for a credit card in Australia, and most require that you are an Australian citizen or permanent resident. However, there are some credit cards available to temporary residents.

How do you use credit cards?

A credit card can be an easy way to make purchases online, in person or over the phone. When used properly, a credit card can even help you manage your cash flow. But before applying for a credit card, it’s good to know how they work. A credit card is essentially a personal line of credit which lets you buy things and pay for them later. As a card holder, you’ll be given a credit limit and (potentially) charged interest on the money the bank lends you. At the end of each billing period, the bank will send you a statement which shows your outstanding balance and the minimum amount you need to pay back. If you don’t pay back the full balance amount, the bank will begin charging you interest.

How do you use a credit card?

Credit cards are a quick and convenient way to pay for items in store, online or over the phone. You can use a credit card as a cashless way to pay for goods or services, both locally and overseas. You can also use a credit card to make a cash advance, which gives you the flexibility to withdraw cash from your credit card account. Because a credit card uses the bank’s funds instead of your own, you will be charged interest on the money you spend – unless you pay off the entire debt within the interest-free period. If you pay the minimum monthly repayment, you will be charged interest. There are many different credit card options on the market, all offering different interest rates and reward options.

What should you do if your credit card is compromised?

Credit card fraud is a serious problem. If your credit card is compromised and you’re wondering what to do, here are a few precautionary steps to take.

Contact you credit provider – Get in touch will your credit card provider. If you feel your card has been compromised, you should be able to lock or block it.

Monitor your accounts – Keep an eye on your credit card accounts. Any unauthorised transactions could be a sign your credit card has been compromised.

Check your credit rating – It’s also important to check your credit rating, to ensure you’re not a victim of identity theft or some other financial mischief.

What should you do when you lose your credit card?

Losing your credit card is a serious situation, and could land you in financial trouble. Here is a simple guide detailing what to do when you lose your credit card.

Lock you card – Contact your provider and inform them about your lost credit card. From here lock, block or cancel your card.

Keep track of transactions – Look out for unauthorised credit card transactions. Most banks protect against fraudulent transactions.

Address recurring charges – If your card is linked to recurring charges (gym membership, rent, utilities), contact those businesses.

Check credit rate – To ensure you’re not the victim of identity theft, check your credit rating a month or two after you lose your credit card.

Should I get a credit card?

Once you've compared credit card interest rates and deals and found the right card for you, the actual process of getting a credit card is quite straightforward. You can apply for a credit card online, over the phone or in person at a bank branch. 

Do you need a credit card to get a loan?

You do not need a credit card to get a loan, but you usually need to have a credit history. Without a credit history, a financial institution cannot assess your ‘credit worthiness’, or your capacity to pay off the loan.

If you don’t have a credit card, your credit history can reflect any record of paying off an asset. Without any credit credit history, you’re limited in the type of loans you can apply for. But you may be able to obtain a secured loan against an asset. For more information on improving your credit score, go here

What is a credit card?

A credit card is a payment method which lets you pay for goods and services without using your own money. It’s essentially a short-term loan which lets you borrow the bank’s money to pay for things which you can pay back – potentially with interest – at a later date. Credit cards can also be used to withdraw money from an ATM, which is known as a cash advance. Because you’re borrowing money from a bank, credit cards charge you interest on the money you use (unless you repay the entire debt during the interest-free period). When you apply for a credit card, the bank gives you a credit limit which sets the maximum amount you can borrow using your card. Credit cards are one of the most popular methods of payments and can be a convenient way of paying for goods and services in store, online and all around the globe.

How do you cancel a credit card?

It’s important to cancel your old cards to avoid any additional fees. Unless you’re doing a balance transfer, you’ll need to pay the outstanding balance before you cancel your credit card. If you’ve opted for a card with reward points, make sure you redeem or transfer the points before you close your account. To avoid any bounced payments and save yourself an admin headache, redirect all your direct debits to a new card or account. Once you’ve done all the preparation, call your bank or credit card provider to get the cancellation underway. Once you receive a confirmation letter, destroy your card and make sure the numbers aren’t legible.

How to get a credit card for the first time

A credit card can be a useful financial tool, provided you understand the risks and can meet repayment obligations.

If you’re a credit card first-timer, review your options. Think about what kind of credit card would suit your lifestyle, and compare providers by fees, perks and repayments.

Once you’ve selected a card, it’s time to apply. Credit card applications can generally be completed in store, online or over the phone.

When you apply for a credit card for the first time, you must meet age, residency and income requirements. As proof, you must also provide documentation such as bank account statements.

What is a balance transfer credit card?

A balance transfer credit card lets you transfer your debt balance from one credit card to another. A balance transfer credit card generally has a 0 per cent interest rate for a set period of time. When you roll your debt balance over to a new credit card, you’ll be able to take advantage of the interest-free period to pay your credit card debt off faster without accruing additional interest charges. If your application is approved, the provider will pay out your old credit card and transfer your debt balance over to the new card. 

What's the best credit card for rewards?

There is no one-size-fits-all best rewards credit card. It's best you research what type of rewards program you'd like, as well as the fees, interest rate and conditions associated with those types of cards before making a choice. 

Rewards credit cards can also come with high annual fees that may end up nullifying the rewards, so think how often you use the card to decide whether the benefits outweigh the extra cost for you. A card with a lower annual fee might require a lot of spending to get any useful rewards, while another card with a higher annual fee might need fewer purchases to get a reward. 

How do you apply for a credit card?

You can apply for a credit card online, over the phone or in person at the bank. Once you’ve compared the current credit card offers, the application process is quick and easy. Before you get your application started, you’ll need to gather your personal information like proof of ID, payslips and bank statements, proof of employment and details of your income, assets and liabilities. To be eligible for a credit card, you’ll need to be an Australian citizen over 18 and earn a minimum of $15,000 each year. Once you’ve applied for a credit card, you should get a response fairly instantly. If your credit card application has been approved, you should receive a welcome pack with your new credit card within 10-15 days.