3 things to consider when choosing your second credit card

There's something to be said about loyalty when it comes to family and friends. When it comes to credit cards, however, there's not much to be said whatsoever: Singaporeans had about 3.9 to 5 cards per cardholder .

You're not obligated to stick with any credit card through thick and thin. In fact, you're probably better off if you don't. Getting a second credit card that fits your spending habits can earn you more rewards or save you on interest.

But how should you decide if you should get a second credit card, and how should you pick it? Below, we walk you through the major consideration points so you can best prepare a set of cards that maximise rewards for ever dollar you spend.

When to apply

There's no perfect time to apply for a second credit card. As long as your budget can handle spending across a few cards, you should be able to get one.

It may causes some minor issues only if you are about to apply for a mortgage, but in most cases you are probably in the clear. It might be an especially good time to apply for a second credit card if you identify with any of the following:

• Your income has increased, and now you have access to better credit card options.
• Your spending habits have changed. If your card offers bonus rewards only on restaurants, for example, and you no longer dine out often, it might be time for a change.
• Your current credit card has a cap on reward you can earn, and you want more rewards or benefits .
• You can comfortably meet the minimum spending requirements of your first card, and still have enough left over spending that you could be earning better rewards for.
• You're carrying high-interest debt . Moving your debt to a balance transfer card can save you money on interest.

To be sure, you won't be earning more rewards or save more money just because you get more credit cards. In fact, if you are not careful about how you spend your money and paying down your card balance on time , it could even hurt you.

But if you are comfortable with managing your card bills and controlling your spending level, it could be a good time to start looking for a new card.

What to look for

When getting a second card, it is important to consider how a card can complements your spending habits and the credit card you already have. If you plan to pay in full every month, your interest rate won't matter. Instead, look for a card with:

• Better rewards rates than your existing credit cards
• High cashback or miles rewards on specific spending categories like dining, groceries, petrol, travel, shopping, entertainment, utilities, etc.
• Low or no annual fee
• Low or no spending requirements
• Low APR (i.e. 0per cent introductory APR) for balance transfer

Keeping your first credit card open will generally improve your credit. But if you aren't using that card and it charges an annual fee, or if it's a secured card and you want your deposit back, ask your issuer about converting it to a no-fee or an unsecured card. If those aren't options, close it.

Should you get a third credit card?

Two credit cards might be better than one. But will a third one boost your rewards even more? It might not hurt you, but it probably won't help you much, either — at least, not in the long run.

In fact, many credit cards in Singapore come with annual fees and require a certain level of monthly spending to qualify for certain benefits like annual fee waiver or extra cash rebate.

Therefore, spreading your spending too thinly across multiple credit cards can easily be a loss-making proposition.

Not only that, having many cards increases the chance that their core benefits will overlap. Even if you want to keep applying for cards just to get their sign-up bonuses, cancelling multiple cards quickly over and over again just to get rack up points and sign-up bonuses could hurt your credit score as well.

As your collection grows, multiple annual fees could eat away at your rewards, and your wallet could become more difficult to manage especially because of different spending requirements and billing cycle.

Keep your credit card collection a lean, mean, benefit-generating machine. Choosing a second card that's worthy of a space in your wallet is a great place to start.

This article was first published in ValueChampion.