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Here’s what to Consider When Applying for More Than One Credit Card

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As per recent statistics, the total credit card transaction value for June 2020 stood at approximately Rs.234 million. It shows that India is inclining more and more on credit cards to purchase goods and services.

Credit cards have several advantages such as it increases one’s purchasing power, aids cardholders in building a favorable credit profile, etc. Furthermore, responsible usage also helps in improving one’s credit score.

Consequently, financial institutions offer a vast array of credit cards to suit different spending habits and needs. So, apart from credit card comparison, there are several things that you should consider, if you are planning to apply for more than one card, there are first apart from –

● Credit score

Since credit cards are a type of unsecured advance, there are higher chances of defaulting on a payment. Consequently, before approving a credit card application, financial companies request an applicant’s credit report and score, which is known as a hard inquiry. 

When you apply for more than credit cards, it results in multiple hard inquiries, which can result in lowering your score. Hence, if you have a low credit score, you should avoid applying for more than one credit card at the same time.

Remember, you can also use a credit card to improve your credit score by managing it responsibly.

● Bill payment capacity

If you are planning to apply for two credit cards at the same time, you must make sure that you have sufficient financial capacity to pay off the outstanding amount every month within the due date. In case of any missed or late payment, your credit score will also be significantly affected.

Furthermore, the credit card company will also assess your income profile before approving your credit card application. If they consider it to be inadequate, they may reject your card application, which will harm your credit score.

Hence, it is best if you assess your bill payment capacity as well as weigh the pros and cons of having multiple credit cards before applying. For this, you need to calculate your FOIR or fixed obligation to income ratio. It is used to determine the percentage of an individual’s income that goes towards servicing existing debts such as rent, loan EMIs, etc. Therefore, if you have a high FOIR, you should avoid applying for two credit cards.

● Eligibility –

There are multiple credit card types with different eligibility. You need to check if you are eligible to apply for and receive approval for two credit cards at the same time. It is crucial since if you are not, your credit card application will be rejected.

Carry out a credit card comparison first and go through the eligibility criteria specified by the lending institution to ensure that you satisfy all the parameters. The basic parameters that every applicant must meet are as follows –

i.  Applicants must be within the age of 25 – 65 years of age.
ii. They should be residing citizens of India.
iii.They must maintain a CIBIL score of 750 or above.
iv. They should have no history of defaulting.

However, when you are applying for credit cards, you should look out for financial institutions that provide pre-approved offers to customers for a hassle-free application procedure. Besides credit cards, such offers are also available on other financial products like business loans, personal loans, etc. You can quickly check your pre-approved offers by providing your name and contact information.

Instead of opting for two cards at the same time and going through the hassle of credit card comparison, you can also consider availing products like RBL Bank SuperCard that offers the benefits of four cards in one. You should, however, carry out a cost-benefit analysis before applying to make sure that it complements all your spending needs.

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