Why One Credit Card is Not Enough

Ever wonder why people say that when it comes to credit cards, one is not enough? It's true, and for many reasons. Most people think that you only need one card with a high limit, and you are set. The thing is, not only do lenders want to see that you can resist the temptation to use all of your available credit, there are many more reasons to have an extra card or two. Here are just a few:

• Compromised numbers – If credit card companies suspect fraudulent activity, they might freeze your account, which you might not learn about until you are at a cash register or possibly even away on vacation.
• Lost cards - Did you know it can take up to two weeks for issuers to send you a replacement card? While some can get a new card in your hands in as little as 24 hours, some take as many as 10 business days. For this reason alone, you need more than one card. (Credit Sesame tip: never carry all of your cards at once. If you lose them, you could be stuck for weeks without being able to pay for a thing, which could include items such as your insurance or phone bill. Given this scenario, you need at least two cards—one to carry and one to stash.)
• Bad surprises - Unfortunately, most people learn they accidentally missed a payment or that the magnetic strip on their card is broken when a charge gets declined. For this reason, it might be best to have three cards—two to carry (in case one fails) and one to stash.
• Different cards have different benefits – Do you have both a specific store you frequent and a specific airline you like to fly? Store cards often offer savings perks while airline cards offer miles and other travel benefits. Having specific cards to use at appropriate times can help you earn the rewards you want.
• Emergencies – Ideally, you will have a solid savings account for big emergencies, but in the event that you don’t or would rather not deplete it, having a low-interest rate card on reserve is important.
• Limited Vendor Acceptance – Did you know that the only credit cards Costco accepts are Visa cards and that not all vendors take American Express? Again, you don’t want to discover that you are unable to make your purchase while standing in the checkout line.

Remember, you don't actually need to use your extra cards regularly, just once a year or so to keep them active. The more credit you have, and the less you use it, the lower your credit utilization, and thus the higher your score.