How to Work Towards a Better Credit History Using Two Credit Cards

Let’s say your fridge breaks down just before a long summer weekend. With the heat creeping in, you need a replacement fast. Unfortunately, your main credit card is already carrying a large balance after paying for school tuition and an unexpected vet bill.

Thankfully, you’ve got a second card. Not only does it let you buy a fridge without delay, but you also avoid maxing out your original card to maintain your good credit standing. So long as you make your payments on both cards in time, you’ll still come out on top.

For a growing number of Filipinos, credit cards are no longer just nice-to-haves to be busted out during emergencies. Online searches for “credit card online application Philippines” have continuously increased over the past several years, demonstrating strong demand and, perhaps, wider knowledge of the more specific benefits of today’s credit cards. More people are getting them to manage daily cash flow and build financial capacity, with a growing number of users further expanding on these benefits with multiple cards.

If you’ve already learned the ropes of using one credit card well, a second one might just be what you need to level up. Here’s how you can safely work towards a better credit history using two credit cards.

1. Use the Second Card to Spread Out Your Expenses

Your credit utilization ratio (how much of your available credit you’re actually using) is a key factor in determining your creditworthiness. If your main card is always running at 80 to 90% of its capacity, issuers may be far less inclined to bump up your credit limit. If you get a second card and split your expenses between both, however, you can keep your total credit utilization ratio low on both cards, potentially preserving your credit profile. As a general rule, you will want to keep credit utilization under 30% on both cards to reap maximum benefits, later on.

2. Match Each Card to Its Optimal Spending Categories

If you have a cashback card that rewards everyday purchases like the Landers Cashback Everywhere credit card by maya, which gives you more cashback for Landers purchases, then consider using it exclusively for groceries. This not only helps you track that expense category more easily but also lowers its effective cost through rebates.

The same principle applies to second cards geared towards fuel, travel, or other spending categories. Apart from reducing your credit utilization, this strategy also unlocks rewards and makes your spending patterns more manageable.

3. Never Miss Your Due Dates

Two cards mean two billing cycles and double the chances of missing a payment. It only takes one late payment to hurt your credit history for years, especially if you’re still in the process of building it.

To prevent missed payments, you’ll want to enable SMS and email reminders for both cards and set up separate reminders on your phone. Your personal reminders should be set up on your paydays rather than your actual due dates so that you remember to pay when you have money.

Setting up second reminders a couple of days before your due dates is also a good idea to give you time to look for funds in case you’re about to come up short.

4. Don’t Open Too Many Credit Accounts

Having two credit cards is one thing, but having three or four is another thing altogether. Multiple credit checks in a short period could negatively affect your credit profile, which is the opposite of what you want. Instead, just stick with two cards for the first few years and avoid any big-ticket purchases that will max both of them out. Soon enough, you should qualify for better limits without needing another new account.

5. Don’t Forget Your Annual Fees

Two cards also mean two annual fees. That is, unless you’ve qualified for fee-free cards or received waivers for consistent use. This means that a two-card strategy will almost always come with an added cost.

If your lifestyle changes or if your credit limit increases, you may no longer need to keep juggling multiple cards. In these cases, you may as well cancel your less-used card to save yourself from having to pay more on annual fees.

A Stronger Credit Profile Might Be Another Card Away

If you’re new to credit cards, most financial advisers will probably tell you to stick with just one card. This is sound advice, though maybe not for the reasons you might think. Using a credit card has a learning curve, with billing cycles, reward structures, and credit limit utilization levels to consider. It can take anywhere from a couple of months to even a year before a newly minted cardholder gets the hang of using one credit card for safe, everyday spending. Adding a second card to the mix can complicate things and potentially send a new cardholder into a debt spiral.

Still, if you can handle the responsibility, taking on a second card can be an excellent way to consistently build your credit history over the long term. With deft handling, you can potentially build your credit profile faster than you might with just a single card. Whether you’re working towards a house loan or simply want a deeper level of financial stability, these tips will hopefully get you there, without any late fees.