If you need to borrow money but are new to credit or need to improve it, you might feel limited in your options. A secured credit card is an excellent choice for those who don’t qualify for an unsecured card but want to build or repair their credit. So if one is good, two must be even better, right?
It depends, according to AskMr.CreditCard.com. For some, having at least two cards from two separate providers is ideal, particularly if one is lost or stolen. But if you’re considering getting a third or possibly fourth card, there can be too much of a good thing.
Generally, one card should be more than enough — and definitely no more than two. Here’s what else you should know about having multiple secured cards, according to Mr. Credit Card.
You Only Need One Card To Build You Credit
When you are new to credit or in the process of improving it, your primary focus should be on building healthy financial habits. Having more than one credit card — even if it’s just two — means more work remembering due dates and managing balances.
Not only that, but having a higher credit limit can also tempt you into spending more, which you should avoid when you’re trying to fix your score.
It’s Good To Have A “Backup” Card
Having two credit cards (whether secured or unsecured) can be beneficial if you accidentally lose your card or it is stolen. This way, you have a replacement card on-hand and don’t lose access to your entire credit line.
When you report a lost or stolen credit card, you won’t receive the replacement for up to three business days. You never know when you’ll need to use a credit card, so having two can give you some convenience and peace of mind.
Have Cards From Different Companies
If you do happen to get two secured (or unsecured) cards, try to get ones from separate networks. For instance, if you apply for the USAA secured American Express, you might also consider getting a Secured Visa since fewer merchants accepted American Express cards. If you have an Amex card, try to get another from Visa or Mastercard.
Alternatively, you might pick the Discover it Secured Card. Although most vendors across the US accept Discover, you might come scores some that do not. Additionally, few European merchants take Discover as a form of payment, so if you travel internationally, you should have a card from another network available.
Get Cards From Different Issuers
While uncommon, credit card issuers have the power to close your credit card account for any reason. If you have two cards from the same card provider, you lose access to both lines of credit.
To avoid this problem, you might consider applying for cards from different issuers. With USAA, for example, you can get secured cards from Amex and Visa, but that doesn’t mean you should. You could perhaps get the Visa and pair it with a Capital One Mastercard. This way, you always have a card ready if one issuer cancels your account.
Avoid Getting More Than Two Secured Cards
When you’re trying to build your credit, most experts suggest getting no more than two secured credit cards. More than that does nothing except increase the risk of hurting your score.
If you use your secured cards responsibly for a certain time frame (such as six to 12 months), you might have an opportunity to upgrade to an unsecured card. Of course, you have to maintain a low credit utilization ratio and make each payment on time and in full.
When you have multiple secured cards, you also have to use them each month to avoid an inactivity fee. Tracking your spending across multiple accounts only means more work and headaches for you. Sure, automatic payments and mobile apps can help, but it’s still a lot of effort even with those.
If you have held two secured cards for at least a year and been smart about using them, your credit is likely in the right place. Even if the card provider never offered you an upgrade, you should check your report and see if you qualify for an unsecured credit card.
- AskMrCreditCard. “Home.” How Many Secured Credit Cards Do You Need?, www.askmrcreditcard.com/secured/guide/how-many/.