You Need at Least Two Credit Cards. Here’s Why.

I got mugged on my way to the first-ever Financial Blogger Conference. The thieves got my wallet, which contained a credit card and some cash.

But not all of my cash, or all of my cards. After reporting the crime and calling the card issuer, I was able to get myself to the airport and fly to the conference. That’s because I don’t put all my financial eggs in one basket: Most of my money and a second credit card were divided among pockets in my jeans and coat.

A few years later I was on vacation in London. While checking e-mails at the hostel where I was staying, I noticed an alert from one of my credit card issuers. Apparently someone had tried to use my card to buy a bunch of lawnmowers in Florida. Heaven knows how the crook got my number, but fortunately the card company flagged this as “not a typical purchase.”

However, that card was now kaput and I was thousands of miles away from home. But once again, I had a second card (plus a fair amount of British currency still – I’m a cheap traveler) so everything was just fine.

Suppose you were on vacation or traveling for business and your credit card got hacked, lost or stolen. Would you be able to manage?

Or suppose this happened to you right here at home. Would you be able to put gas in the car, fill a needed prescription, or pay the dentist if the plastic stopped working? After all, it can take days for a replacement card to arrive.

That, my friend, is why you need at least two cards.

Cash Isn’t Always King

Plenty of folks would counter, “Why not just use cash?” or “Yeah, well, I’d just use my debit card.” Which is fine, if you’re in a position to do so. Not everyone is, especially single parents, the un- or underemployed, or those living paycheck to paycheck.

Twice during my lifetime, family medical emergencies have meant dropping everything and flying thousands of miles on a few hours’ notice. Plastic made that possible. Fortunately I was able to cover the bills at the time. But even if I hadn’t been, it would have been worth it to be there. I feel bad for those who would have to say, “Sorry I can’t afford to be there while Mom is dying – give her my best!”

In my case, the parent who was so critically ill made a startling recovery and I was able to go home within a couple of weeks. The second time wasn’t so lucky: My daughter, at that time a college sophomore, was hospitalized for several months with a rare neurological illness. For about two-thirds of that time, Abby was paralyzed and on life support, able to communicate only by blinking.

The idea that she might have had to spend all those days alone (except for periodic nursing care) still gives me the shudders. Thankfully, it wasn’t necessary because a credit card made it possible for me to buy a same-day plane ticket and fly to her bedside, and pay for my food and incidentals during those few months.

Many years later, while we were attending a conference together, my daughter got sick again. Different illness, same result: hospitalization (albeit a much shorter one) in the conference city and additional expenses for me because I couldn’t leave. (I wrote about this in “The Painful Truth About Your Emergency Fund.”) Having the ability to pay with plastic made a tough situation easier, vs. having to wire home for extra cash or find a way to transfer money from savings to checking so that I could use a debit card.

Don’t Rely on Debit

Which brings me to another issue: Debit is not a good substitute for credit.

A debit card, if compromised, takes money directly from your bank account. Sure, it will likely be replaced by the bank after an investigation – but that takes time. Until it’s put back in, people living close to the bone might have a hard time covering the bills. (Hint: Your landlord or auto loan servicer probably doesn’t care about your personal problems, including debit card fraud. They just want their money.)

Additionally, debit cards do not help you build a good credit score. Some people prefer debit and consciously avoid credit cards, saving up for what they need and paying cash. Some even get a little self-righteous about it: They’ll never wind up deep in debt for stuff they don’t even need. They’ll never pay double-digit interest.

Except that they might, actually: A low or nonexistent credit score often means paying higher interest rates for stuff like auto loans and mortgages – assuming you can get these things at all. A less-than-stellar score can also affect how much you pay for car insurance. Prospective landlords and employers might also want to take a look at your credit score.

Like it or not, your credit score matters.

Is the system a de facto penalization of those who are financially responsible, or of those who’ve had major medical debt or other crises beyond their control? Yes. But it’s what we have right now. In my second book, I noted that, “Opting out of credit is like acting as your own attorney because you think lawyers charge too much. The cost of making that stand is much too high. A savvy consumer will learn to work within the system.”

Other Benefits of Credit

I also believe in these other reasons to get credit cards:

Rewards cards rock: If you’re going to buy stuff anyway, why not get a bonus? Especially since there’s a card to match just about every situation: cash-back cards, hotel points cards, airline cards, and all-purpose travel cards.

Just starting out? Get a secured card and use it to help you build a solid credit score. Need to start over? Some issuers have cards for those with bad credit. Got your own business? Look for a business credit card that offers perks on typical business expenses like office supplies.

They have built-in protections: The Simple Dollar’s Holly Johnson was overcharged while on a family vacation and the vendor wouldn’t fix the mistake; a quick call to her credit card company got her an instant refund. Had she paid with cash, she’d have been out of luck. Other consumer perks are available, too, such as primary rental car coverage and price protection. (Learn more by reading “Eight Hidden Benefits of Credit Cards.”)

Last-ditch safety net: In an ideal world, we’d all have a year’s worth of living expenses in an emergency fund and completely secure jobs. Welcome to reality, where bad stuff sometimes happens to good people. Should one of your relatives become critically ill, the way mine have, you can get to where you need to be. If your vehicle needs major repairs and you don’t have enough saved to pay for it, you can still get to work. And so on and so on.

The Bottom Line

To be clear: I would never suggest using credit cards to live beyond your means. They are simply one more weapon in a savvy consumer’s arsenal, both for building credit and dealing with emergencies.

The chance to earn some pretty sweet rewards is a nice side benefit. For example, rewards credit card points cover most of my holiday and birthday gift-giving. And thanks to hotel rewards points my daughter has earned, we’ll be able to do a few days of sightseeing before the 2019 Financial Blogger Conference in Washington, D.C.

Use credit wisely, but do use it – and keep your options multiple.

Award-winning journalist and veteran personal finance writer Donna Freedman is the author of “Your Playbook for Tough Times: Living Large on Small Change, for the Short Term or the Long Haul” and “Your Playbook for Tough Times, Vol. 2: Needs AND Wants Edition.”

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