There are a lot of credit cards out there that offer different types of perks, privileges, and rates. Credit card issuers like banks craft a variety of options to choose from. Many issuers allow for a second or third card to be approved for their existing customers. There are only a few criteria that you need to meet to get approved for a new one.
If you’re looking to apply for another credit card, here are a few things to watch out for before applying from the same issuer.
Benefits of applying from the same bank
1. You don’t go through rigid credit investigation again
Oh yes, having a good credit relationship with your current issuer provides you with higher chances of approval. Since you already have an account with the, they don’t need to conduct all those verification procedures entailed with credit card application. Some banks would only require you to submit an updated income statement or certificate of employment. The documents will prove your capacity to acquire a new card and get into further debt.
2. You can get the best card offered
Once you’ve established a good credit standing, the issuer can let you own any of its best credit cards in the market. You don’t only get to enjoy the perks, but you also get a higher credit limit. Good credit relationship with any banks also makes you a target for promotional offers. Some of these promos are exclusively granted to responsible borrowers and may not be available for those with delinquent accounts.
3. You might be given a separate credit limit
There are a lot of possible financial opportunities awaiting those with a high credit limit. Much more is the advantage if you have two or more credit cards from the same bank with separate credit limits. This means your debt-to-credit ratio will potentially increase while improving your credit score.
If you are running a small business, you can maximize on the limits to fund your business requirements.
Disadvantages of owning another credit card from the same issuer
1. You can't earn sign up bonuses
Sing up bonuses like free Php2,000 voucher or a new pair of sneakers won't be available to those who already have an existing credit card from the same issuer. For instance, if you already have a Citi Simplicity card, you might not enjoy the Php5,000 worth of gift when you get approved for a Citi Rewards Card.
This can be quite disappointing, but other perks may still be available like No Annual Fees Forever, which applies to any newly approved credit cards within the promo period.
2. Penalties for both cards can be consolidated
If you own two or more credit cards from the same issuer, your penalties and charges from one voucher may be transferred to the other card. Defaulting on your payments with one may affect the costs imposed on the other, too. Although those multiple credit cards are independent accounts, the issuer can have the discretion to impose charges as per your agreement.
3. The credit limit can be shared
There are some instances when the credit limit of all the cards from the same issuer are shared. This means that your Php 100,000 credit will be divided among all your active credit cards. The credit limit sharing won’t be too much of an issue if you don’t require more credit. However, the problem arises if you want to have a higher credit limit for better purchasing opportunities.
4. Another card means a separate membership fee
If you applied during the company’s free annual fee forever promo, then you don’t need to worry about this aspect. However, if you apply for a second or third card outside the promotional period, you might need to worry about annual membership cost. Unless the credit card perks are more than the worth of the annual fees, then there is no use applying for another card from the same issuer.
5. You’re limited to the issuer’s terms, conditions and privileges
Owning several credit cards from the same issuer limits your chances to enjoy other perks from different banks. There will be instances when Bank A may have better privileges with a merchant compared to Bank B and Bank C. If you own credit cards from Bank B, then you might not benefit from the discounts offered by Bank A.
What to keep in mind?
Applying for a second credit card from the same bank is not a problem at all if the benefits can weigh more than the disadvantages. You can own all types of tickets offered for as long as the cost of owning these cards won't take a toll on your wallets.
To be approved for a second or third card is overwhelmingly an honor, mainly so that these are financial tools you can use for improving your life. Once the bank entrusts you with another banking product, you need to make sure you don’t break the trust, and you pay your dues on time.