Credit cards offer several benefits and advantages, which have made them a preferred payment method. Most people own multiple credit cards, as different banks offer different features and offers. There are advantages and disadvantages to owning multiple credit cards. Before you apply for credit card, it is important to know how to manage multiple credit cards effectively. Read ahead to know more.
Tips to Successfully Manage Multiple Credit Cards
- Check the Limit of Each Credit Card
Be aware of the credit limit of multiple credit cards. The bank offers credit limits based on credit history and credit score. You will have a low credit limit if your credit score is low. Keeping a constant check on the credit limit helps in efficient finance planning. This helps to know how much you should spend on the other credit cards. Improper financial planning will leave you with multiple bills of different credit cards. One good tip is to split the monthly expenses between the various credit cards, as this will prevent overshooting the budget.
- Select the Right Credit Card
Choose and apply for credit card that suits your finances and provides the maximum benefits. The interest rate offered is a critical criterion, and the lower the interest, the better. The interest rate varies from one bank to the other, so thorough research is required. Your credit card should also offer maximum rewards like joining reward points and cashback offers. Ideally, you should apply for a lifetime free credit card, as the fees and penalties will be the lowest.
- Leverage the Right Card with Rewards
Use the right card to make the right purchases. Some cards give cashback on groceries and fuel, while others give travel points. When you use the right card, you get many benefits. Also, be aware of the expiration of reward points. Redeem them before they expire.
- Keep the Credit Utilisation Ratio Low
Keep the credit utilisation ratio low to get maximum benefits from your multiple credit cards. Avoid maxing out a single credit card, instead, try to split the large purchase across multiple cards. A low credit utilisation ratio keeps the credit score low. Ideally, the ratio should be under 30%.
- Remember the Bill Payment Date
If the multiple credit cards are from the same bank, the due date is the same. Keep a constant check on the due date for the payment. However, if the credit cards are from different banks, the date is different, and it is difficult to remember all the due dates. Either keep a reminder on the phone for the due date or set up an automatic payment service for the card. The bill amount will be automatically debited from the savings account provided.
A missed payment affects the credit score and credit report. Pay off the entire credit card bill each month. If you cannot do so, pay more than the minimum, as this reduces the interest. Also, pay off the higher-interest cards first, as this reduces the interest rate you will have to pay.
- Check the Credit Card Activity
When you own many credit cards, multiple transactions are made across the cards. It can get difficult to remember all the purchases made. Keep a frequent check on the credit card activity. Constant purchases can cause substantial dues. Check credit card activity via statement or net banking, which helps plan finances.
- Avoid Too Many Credit Cards
While multiple credit cards can be beneficial, too many of them can hurt the credit score. A bank will conduct a hard inquiry before issuing the card, and too many of these can affect the credit score. Before you apply for credit card, choose smartly and consider the risk-reward ratio.
Conclusion
Managing multiple credit cards can help improve your financial health and provide access to various benefits. Before you apply for credit card, set clear financial goals and ensure you pay your bills on time. Staying within your spending limit is also crucial for responsible credit usage.
Having multiple credit cards can be useful in situations that require flexible payment options. These include emergencies, travel expenses, or large purchases. By managing your credit cards effectively, you can maximise rewards, reduce debt, and maintain a strong credit score. A good credit score can lead to better financial opportunities in the future.
