Credit cards have gradually become a premium payment method among the ever-increasing modes of payment all over the world. In India, around 36 million people own a credit card due to the varied range of benefits and offer they receive with a credit card and the easy availability of cash.
Coming to owning multiple credit cards, there are certain advantages and disadvantages to this. There are many people all over the world who collect credit cards for a living. From saving money to fuel, earning cashback offers from every transaction you make, discounts on flight and hotel bookings and earning points on all type's purchases made, different credit cards offer to cater to different kinds of people. To avail all the offers available on various credit cards, having the option of an extra line of credit, people tend to hold multiple credit cards.
However, with its advantages, holding multiple applying for this credit card comes with its own share of cons. If you do not keep a constant check on the credit cards you own, the debt keeps on accumulating. Paying off these credit card bills can become difficult, especially if you have other bills to pay.
How to successfully manage multiple credit cards?
In order to manage the credit cards, you have, here are some pointers which you can follow.
Check and keep in mind the credit limit on each card
In order to manage the multiple credit cards, you own, the credit limit on each card must be checked whenever you make a transaction or purchase, no matter how small. The credit limit on a credit card is offered by the bank depending on your credit score and credit history. The lower your credit score, the lower your credit limit. However, you can always request a higher credit limit while applying for the credit card.
Keeping a constant check on your credit limit helps you plan your finances according to pay off the bill and also how careful you should be on spending with your other credit cards. Most people keep making purchases with credit cards thinking it is a small transaction, and at the end of the billing cycle, are left with multiple bills of large amounts to pay off.
It is essential that you plan your finances on each of the credit cards you own. Since you have two or more credit cards, you can split the monthly expenses between these credit cards to prevent any kind of excess expenditure made on one card.
Choose the right credit card
To manage your credit cards successfully, you must first choose the right credit cards to suit your daily and monthly finances. Apart from this, since credit cards are also known for their wide range of benefits and offers, you should choose the card or cards with which you will be most benefited.
Choosing the right credit card involves checking three main criterions which are:
- Interest Offered: The major factor in deciding which credit card to opt for is the rate of interest. At the end of the billing cycle, you will be paying the amount spent in the month plus added interest charged by the bank. Hence, the lesser the interest, the better it is. The interest rate offered on the credit card varies from one bank to another. Due to this, it is important to research thoroughly to find a credit card giving you more benefits but with lesser interest.
- Benefits and Offers: The second factor to be considered while opting for a credit card is the benefits and rewards which the card offers. With easily accessible cash, the rewards and benefits of a card are highly beneficial for all customers. Choose the card with the most number of rewards such as joining rewards and renewal rewards along with cashback offers.
- Fees and Penalties: Fees and penalties are other factors which play a major role in deciding on a credit card. Most credit cards which have a higher credit limit tend to have higher joining fees as well as annual fees. Some credit cards can come free of cost in the first year but might have an annual fee from the following year. It is important to read the terms and conditions while applying for a credit card.
Keeping a constant reminder on bill payment dates
In order to manage multiple credit cards successfully, it is also important to keep a constant check on the bill payment due dates. Each bank assigns a different and specific date of the month to generate your credit card bill.
If you own two credit cards from the same bank, the due date for bill payment is the same. However, if you own multiple credit cards from different banks, it might be difficult to remember the due date for all your credit cards separately.
There are several ways by which you can efficiently remember the due dates for all your card bills such as keeping a reminder on your phone for the due date. This is one of the easiest ways to remember the date. Another method most credit cardholders opt for is setting up automatic payment. With automatic payment, you do not have to keep a check on the dates of bill payment. Here, you will be required to provide your savings account number and IFSC code to the card issuer and on the due date, the bill amount will be automatically debited from the account you have provided.
It is very important to keep a check on your credit card bill payment dates, especially if you hold more than one credit card. A missed payment on even one card can affect your credit score and your credit report. This will reflect poorly on your payment habit which might affect your chances for future credit.
Check the terms and conditions on your credit card
The terms and conditions for a credit card must be checked thoroughly. The terms and conditions on a credit card point out the fees and rate of interest you will be paying as a cardholder. The terms and conditions of your credit card are available online as well as will be given to you in the document.
It will contain information such as the annual percentage of your credit card which will be used for purchases, cash advances as well as balance transfers. The document will also contain the minimum interest charge if the balance is carried through months. The annual fee, the balance transfer fee, foreign transaction fee, the cash advance fee, late payment, and returned payment fee is also mentioned in the terms and conditions.
Most credit cards come with a reward and offer program which is also subjected to various terms and conditions. It is advised to know the conditions for these rewards and the rules surrounding it. From the minimum purchase amount to the list of partner restaurant, flights, and hotels, to signing bonus as well as any promotional offers.
Frequent check on credit card activity
Owning multiple credit cards means multiple transactions of different values. While having two or more credit cards, it might get difficult to keep a track of all your purchases made. However, it is strongly advised to do so and keep a frequent check on the activity on your credit cards.
Many times, credit cards can be owned by a person but used by family members. Constant purchases on the credit cards might result in substantial debt without you knowing about it or not keeping a track of it. There can also be the case of fraudulent transactions made. Due to this, if you keep a check on your credit card purchases through the card statement or even online, it will help you plan your finances accordingly to pay the bill amount at the end of the month.
Do’s and Don’ts of managing multiple credit cards
Avoid Carrying a Balance
Carrying a credit card balance does not help build your credit score. It is important that you pay your credit card bills in full at the end of the billing cycle. This helps you in keeping a good credit score.
However, if you have balances in either of your credit cards, it is strongly advised to clear the credit card bill which has a higher interest first. This will help you in saving money on interest. You can also choose to close the credit card bill which has a lower balance. This helps you in closing the card account faster. It is advised to pay the credit card with higher interest, and in full and not only the minimum amount due.
Do Pay on Time
Owning a credit card gives you access to a wide range of offers and benefits. However, credit cards also mean credit card bills and constant reminders about bill payment. It is important to pay your credit card bill on time and in full as mentioned earlier.
If you have multiple credit cards, this means multiple credit card bills at the end of the billing cycle. It can get difficult to keep a track of the bills you need to pay and the due date of each card. It is advisable to avoid the late fees on your credit cards by keeping a monthly reminder on your phone or calendar at the due date of each card to pay the bill. There are also a number of applications on your phone which help you keep a track of your credit card bills with the due date for each card. In this way, you don’t miss a payment and it does not result in affecting your score.
Try not to select cards with Annual Fees
It is often advised not to select the credit cards which have annual fees. However, it can seem difficult as credit cards with annual fees offer more benefits, offers and a higher credit limit to its cardholders. But if researched thoroughly, there are a number of credit cards which do not charge annual fees and also offer a reasonable rewards program. It is advised to research or visit banks and credit card companies to know more about the credit cards they offer which do not charge annual fees and also offer rewards and benefits.
If you are selecting a credit card with an annual fee, it is important to calculate the fees for a year and earn rewards and benefits to balance the extra expenditure. For example, if you have a credit card with an annual fee of Rs.3,500 and you make enough purchase to get your airline points worth one ticket which would ideally be Rs.3,000 – Rs.4,000, you do not lose out on the money.
Do Pick the Right Card for Each Purchase
The range of offers and benefits available on credit cards are many. However, many credit cards are curated in such a way that they offer increased benefits on a certain type of purchase. For example, JetPrivilege Platinum Credit Card in collaboration with HDFC Bank has a credit card which offers JPMiles on each transaction you make. Similarly, there are credit cards with dining benefits, fuel benefits, entertainment benefits, etc.
It is important to choose a card which offers you with a wide range of offers with higher or more rewards when it comes to certain types of purchases. If you are an online shopper or a retail shopper, you can opt for the credit card which gives you added benefits on shopping.
In case you hold two or more credit cards, it is advisable to create a list of key points and benefits which each of those credit cards offer you. In that way, you go on a shopping spree or even plan a holiday, you can save money as well as earn rewards and benefits with the transactions you make.
These are the few methods by which you can manage the multiple credit cards you own successfully. In order to know more, it is always advised to consult with your bank or credit card issuer on how you can manage the credit cards you own.
FAQs on How to Manage Multiple Credit Cards
- If I own many credit cards at one time take a toll on my credit score?
We understand that this is a common concern among many, however, having more than one credit card, if used smartly can help in boosting your credit score. You can wisely use your credit cards by avoiding using over 30% of your credit available per card.
- Should I cancel my unused credit cards or should I keep all of them?
It is best to keep your unused credit cards open. This is because you will benefit from a longer credit history. You will also benefit from a bigger amount of available credit. The credit scoring models will reward you for the long-standing credit accounts.
- How can I use two credit cards smartly?
It is wise to keep your credit card spending under control, preferably you should spend not more than 30 per cent of your limit.
- Am I allowed to pay my credit card bill multiple times in one month?
Yes, you can make the payment for your credit card bill on a daily basis as well. It is not necessary for you to make payments only once a month. However, please note that regardless of how many times you make payment in a month, you need to make payments on time to avoid paying a late fee.
- In India, is there any restriction on the number of credit cards a person can hold?
No, there is no rule or restriction on the number of credit cards a person can own. However, you must note that most people opt for a minimum of two credit cards as it is easier to manage them. Usually, one is a card with standard benefits and the other credit card will come with spend-based offers.