If you’re content with just one credit card, you may want to rethink that habit and consider credit card diversification with several cards. Diversifying credit cards is not only safer than using one card, but it can also ensure that you have access to necessary credit whenever you need it. Learn more about credit card diversification below and how it can work for you.

What is credit card diversification?

Credit card diversification is when you have several credit cards, either from different credit card companies (Visa, MasterCard, American Express, etc.) or from different issuing banks.

Why should you diversify your credit cards?

1.    Let’s say your favourite credit card is your American Express Blue Sky credit card, because you enjoy their frequent flyer rewards programme. More than your favourite, let’s say it’s your only credit card. The problem with this is that American Express isn’t accepted everywhere that credit cards can be used. Diversifying credit cards by also carrying a Visa or MasterCard can make sure you can always use a credit card when you want to.

2.    Potential balance transfers are a good reason to diversify your credit cards by issuing banks. That’s because most issuing banks won’t let you transfer a balance to their credit card if the original balance is on another one of their credit cards (like trying to transfer a balance from an ANZ First Visa to an ANZ Balance credit card). By having credit cards with different issuing banks, you’ll have a better chance of having a balance transfer approved.

3.    Another reason to have multiple cards in general is related to fraud protection. Your credit card company might temporarily freeze your account if they notice unusual activity until you verify with them that the charges are authorised. While this won’t usually be a problem, it could happen while doing a lot of holiday shopping or while travelling — neither being times when you want to be completely without your credit card. Diversifying your credit cards means you can simply use another card if one is frozen until you can call the credit card company.

4.    If you only use a single credit card and that issuing bank goes under or is taken over or merged, you might not care for the new management (even if your terms don’t change, you might find the new issuer has terrible customer service). Having cards with multiple issuers makes sure that all of your credit limits won’t be affected by a change like this, giving you more freedom to cancel that credit card without temporarily going without credit.

Diversifying credit cards doesn’t mean that you need a lot of them. It just means you shouldn’t put all of your eggs in one basket, assuming nothing will go wrong and nothing will change. You worry about credit card security in other ways, so consider diversification just another way to protect yourself.