Most credit cards focus on certain spend categories, namely travel, shopping, fuel, dining, and so on. They offer benefits in the form of extra reward points, co-branded advantages, air mile earnings, discounts, and more. For instance, fuel credit cards are designed to provide better benefits on fuel spends, while travel credit cards offer benefits, such as free lounge access, free air miles, and extra rewards on travel-linked spends.
According to a recent study by Paisabazaar, there are different kinds of credit cards to cater to the different needs of the consumers. For instance, Axis Bank Ace credit card is the best credit card in India for cashback as it comes with the highest universal cashback rate of two per cent, according to Paisabazaar. Similarly, SBI Card Elite comes with exclusive shopping vouchers from some premium brands as welcome gift, along with benefits of movie tickets, accelerated reward points, complimentary lounge visits, club Vistara membership, and more. HDFC Regalia credit card offers a wide range of benefits on dining, travel, and shopping.
Then there’s Flipkart Axis Bank credit card, which offers five per cent cashback on Flipkart and Myntra. Cardholders can also get four per cent cashback on Swiggy, Uber, PVR, and Cure.fit. This card provides unlimited cashback of 1.5 per cent on all other spends, too. Amazon Pay ICICI card is good if you shop at Amazon frequently, apart from other benefits.
“Such credit cards give you the best value in return as they are specifically designed to help you save on select spend categories. By using these cards for the right kind of expenses, you can save a considerable amount. However, do note that a card that focuses on a particular category may offer only limited advantages across other categories,” says Sachin Vasudeva, associate director and head of credit cards- Paisabazaar.com.
For instance, a fuel credit card will be quite rewarding when you use it for fuel purchases, but it may not offer you cashback or extra rewards on other categories. For such cases, it is advisable to have multiple credit cards, more so, if you spend considerably on different categories, where each focuses on a different spend type.
How Many Credit Cards Should You Ideally Have?
You can have as many credit cards as you want. But managing several credit cards can turn out to be quite troublesome. One could end up with a high amount of debt, if credit cards are not used smartly. Whether you should have multiple credit cards or not depends entirely on the type of credit card that you hold. For instance, if a person holds a diverse range of credit cards that are very different from each other in terms of usage and benefits, then it is fine.
For instance, one could use a travel credit card for travel-related expenses, and the other for accumulating rewards on regular purchases.
Ideally, one should have two to three credit cards, each with exclusive features; anything more than that is not recommended. In fact, those who are able to manage with one credit card should stick to one. As long as the individual is making payments regularly on all credit card bills, it will not affect or have an impact on access to other forms of credit. For those who are running their own business, it makes sense to have one credit card for personal use and another only for business use.
Adds Vasudeva: “While choosing your second or third credit card, you should consider the features of the existing cards and try to get a card with a different set of benefits. For example, if you already have a credit card that offers cashback across categories, getting another card with a good reward rate or travel-focused benefits would be a better option.”
Having said that, there are several benefits of having multiple credit cards, too. If you own multiple cards, you could spread your expenses across different cards based on the benefits and rewards structure in order to make the most out of each card.
Having multiple cards also allows you utilise the interest-free period on each card optimally. If you have cards from different providers, you will also have a better chance of availing their limited period offers, like those on e-commerce platforms. Also, those who have several credit cards and are still able to make all payments on time, will likely have a good credit score to boast of. This would also increase their credit worthiness and open access to more credit opportunities.