Most affluent segments keep multiple credit cards

SBI Card carried out a customer satisfaction research across seven cities according to the data of the research in India there has been a remarkable increase in the average number of credit cards being owned by the people from 1.8 million in 2003 to 2.2 million in 2006. Among these there is a category of consumers who own multiple cards these include younger, more affluent segments, executives and businessmen.

For instance Keshav Baljee (24), co promoter of Royal Orchid Hotels, maintains four platinum cards with a total limit of close to Rs 10 lakh.

“I go for multiple cards because of the higher limits the cards together give me, concierge services and offers. Since I travel often, the cards serve as an alternative to carrying cash.” But Baljee makes it a point to clear all his dues on time.

Nirupam Sahay, V-P (marketing), SBI Card stated that “It’s more common in the metros and mini-metros”.

Banks have different cards for different categories offering wide range of benefits luring customers which encourages the consumer to go for multiple cards like travel card, petrocard, shopping card, food card and travelers card.

According to Krishnan Govindan , head marketing (credit cards) at ICICI Bank,
“People use multiple cards because of the benefits like emergency back up, additional credit limit, balance transfer at a lower interest rate compared to revolving credit and to avail of benefits exclusive to those cards”.

According to ING Vysya Bank official there are certain co-branded cards that offer customers inherent benefits, which prompt them to use the card for specific purposes. Then there are also other factors that push and pull factors responsible for this. “Aggressive marketing by credit card companies sometimes compels customers to opt for more than one card. With no joining or annual fees, the entry barrier is gone and customers no longer hesitate,” says Sahay.

According to Anil Rego, CEO of Right Horizons, a wealth management firm despite having many cards, people frequently uses only one or two of them. “If you look at the usage of multiple cards, it’s not high since it’s difficult to keep making payments to different cards. Payments and tracking expenditure is easier if you use one or two cards. And people also prefer to accumulate loyalty points on a single card”.

Baljee prefers his card statements online. “It’s easier to track as you check your mails everyday and there is no chance of losing it. Getting reminders to pay on time through SMSs are good ways to keep a track,” he says.

However wealth managers advise against keeping multiple cards. They say, “It’s difficult to keep track of due dates as most of the vendors have different dates. Late payment interest is high on cards, so you can’t afford to miss due dates. If you carry many cards in your wallet, you also stand the risk of bigger losses if say, you lose your wallet.”

Many cards have strings attached and could be free for only a year. There are chances one may forget to cancel the card and end up paying annual fees every year. Paid cards add to costs substantially and should be avoided. Your points may be distributed across various cards in small amounts and thus you may lose out on encasing the rewards.