If we had discussed this topic several years ago, I would have said that many people were concerned about having multiple cards because they were afraid of falling behind on their payments or would feel too tempted to overspend. But, having this discussion today produces a different angle to the topic. People’s perception about having multiple cards has shifted, especially in light of the failing economy.

Recent studies have shown that the average American carries 7-10 credit cards and more than half of those people carry balances on them. Given the dramatic increase in gas and groceries, people like having options with their credit cards, so spending has certainly increased. I’m not advocating that people using their credit cards to live off of should have multiple cards. As a financial advisor, that would be very irresponsible of me. However, for those who manage their money and their credit cards wisely, there are four very good reasons for having multiple cards.

4.) Easier bookkeeping. Many people often use their credit cards for business expenses that will later be reimbursed by their employers. However, it can be difficult to go through credit card bills each month and figure out which is which. Having a separate credit card for business transactions can make bookkeeping much easier. Personally, I have found this very helpful and convenient. In one of my banking positions previously held, I did a lot of traveling to other locations in other cities to help with training. I found it much easier to send them my credit card statement than to hang on to receipts and go through the bill every month to try and separate the purchases. It certainly made traveling less of a hassle.

This particular reason is also good for those who are self-employed. Having a separate credit card for business purposes makes it easier to identify purchases that can be considered a tax write-off. Plus, it keeps things separate altogether, which just makes tax time much easier than sifting through monthly bills to determine what was business and what was personal.

Outside of business related reasons, credit cards offer a way to see what you’re spending the most money on. The convenient breakdown of each statement can be a gage to see which areas you can tighten up. Arguably, a Quicken or MS Money download could do the same thing; however, using credit cards for different reasons puts you on the spot so you have to consider your purchases whereas with Quicken the money has already been spent. Yes, you get the same information, but Quicken makes it easier to spend that money and worry about it later – it’s not at the forefront of your mind when you’re swiping the card. Some people have found this to be an excellent tool in managing their budget.

3.) Credit score aid. I can hear the naysayers now, “Having too much available credit is bad because lenders will think a person is more prone to being in debt.” Not necessarily. Lenders value an established history of responsible payments on a credit report over how much available credit you actually have. The most important aspect is the debt-to-limit ratio. If you have 9 cards and they’re all maxed out, that hurts your score more than if you had 9 cards with 40% capacity on each one. By showing that you can make payments on time and manage debt on all 9 of your cards, you prove to a lender that you are responsible and creditworthy.

HOWEVER, I will note that having 9 credit cards with no balance and no activity can hurt your score. This is because there is no positive payment activity to show lenders that you can manage your debt effectively. As a result, you become more of a risk because there is so much available debt, but no proof that you can repay that debt in the event something happens. There is a fine line between the two – it’s ok to have multiple cards with quite a bit available in relation to the debt you owe. It’s not ok to have multiple cards with no debt and no activity.

In addition, banks are starting to become more stringent with their credit cards and are closing accounts in order to save money. If an account is closed, whether by the consumer’s choice or not, it will adversely affect a credit score. Someone with 9 cards will have less of an impact than someone with one or two cards.

2.) Rewards. This perk may not appeal to some – particularly those who are not fond of credit card spending – but many people enjoy getting rewards for their patronage. Having multiple cards with different rewards can often be beneficial – if used correctly and responsibly. Many people will get different cards to enjoy different rewards, i.e. one card for airline miles, one for gas rebates, and one for points redeemable for shopping, dining, and entertainment. This is currently how I have mine set up and I find that it’s nice to be able to get a free roundtrip ticket every year where I can eat out and go shopping on the credit card company – and I get discounts on my gas all year long. I use my credit cards to my advantage, specifically for those points. I travel a lot and they work for me. They may not work for everyone, but it’s a good reason to have several cards when managed responsibly.

1.) Financial safety. While debit cards offer many of the same safety features as a credit card, the reality is that if your debit card is stolen or the number compromised, your entire account could be cleaned out. Yes, you’ll get that money back, but sometimes it could take too long. On the other hand, a credit card offers some security in that it’s not tangible cash that you’re losing. The credit card company can take care of anything that you dispute and you have peace of mind knowing it’s not your entire checking account along with your life savings that you’ve attached as overdraft protection.

Beyond that, experts also recommend that you keep a credit card with a zero balance in a secured place outside of your home – such as a safe deposit box. If, knock on wood, something were to ever happen to your home, like a fire or a burglary, you would have access to funds while you wait to have the stolen cards replaced – or until you get a check from your homeowner’s insurance for your house.

Other forms of security include online purchases. Having a separate card solely for online shopping is a great way to limit identity theft and fraud. Also, multiple cards are convenient in the event of a decline. This can happen when traveling overseas if you carry debit cards. If you don’t inform your bank that you are traveling, they may suspect fraud and freeze the use of your debit card. While this is certainly thoughtful in preventing fraudulent activity from occurring on the account, it is terribly inconvenient to be stuck without a backup plan.

While I think these reasons are good reasons to carry multiple cards, I must again stress that I do not advocate multiple cards to those who cannot manage them. In fact, I think if someone can’t manage one card, they should do without. Yes, debit cards can take the place of credit cards in a lot of ways, but they are not without their faults either. If lost or stolen, someone could wipe out your entire account. When traveling overseas, your bank could shut it down. Having credit cards is really more of a convenience, but if you’re going to carry them, you might as well use them to you advantage.

What other reasons would you need (or want) to carry multiple credit cards?

Related posts:

1. Debit Cards Vs. Credit Cards: Plastic Showdown
2. How Many Credit Cards Do I Need?
3. An Introduction to Business Credit Cards
4. Top Ten Reasons to Pay off Your Credit Card Debt
5. 5 Goofy Reasons to Rack Up Credit Card Debt