It is pretty common for customers to have multiple cards since a single credit card doesn't offer all the perks an individual is looking for. Also, multiple credit cards can help customers manage expenses more easily.
If managed wisely, using multiple credit cards can have various benefits but it is very important to juggle the cards smartly. Using different credit cards for different purposes is very convenient but the more credit cards you have, the more work is required in order to handle them properly.
Different credit cards have different features, different credit limits, interest rates, due dates, etc which can become a hassle. Let's look at a few tips which may help you manage your multiple credit cards more efficiently to get the most value.
Automatic payments
Having multiple credit cards can be confusing. It can be very easy for individuals to forget the due date of a card and miss payments. Any default on payments can lead to penalties or charging a higher interest rate which in turn will lead to you paying more than needed.
Hence, while managing multiple credit cards, it is very necessary that you set automated payments with your banks. This way, even if you forget, the payment is made directly from your bank account to your credit cards. Missing payment not only leads to extra interest charges but also lowers your credit score which is important for other financial services as well like taking loans.
Pay the complete bill
It is also important to pay the full due amount when handling multiple credit cards. While it may seem easy to just pay the minimum due every month, that just increases the interest you have to pay on the remaining amount.
In the case of multiple credit cards, if you do not pay your bill in full, the interest charged on your remaining amounts of the different credit cards can become a financial burden in the future.
You will not have to incur extra interest on the remaining due amount of 1 card but more than one which will become a significant amount as the interest rates charged by credit cards are usually at the higher end as compared to any loans.
Know when to use each card
A benefit of having multiple credit cards is that the individual can get different rewards for different purchases. Some credit cards offer rewards on retail shopping, others may be offering rewards on movie tickets, plane tickets, groceries, bills, fuel, etc.
It is important for you to remember which is which. If you use your credit card which offers more rewards and discounts on fuel while shopping for groceries, it may not be very beneficial. So an individual must remember which card offers benefits in which area. To make it easy, customers can label their credit cards like - 'fuel', 'groceries', 'dining' to make it easy to distinguish between cards.
Review Credit Card costs
Different credit cards have different annual fees, processing charges, other costs, etc. When multiplied, these charges together can end up costing more than needed. So it is essential that you review your cards and see if any card costs you more than they benefit you.
In such cases, you can cancel your credit card which is not very beneficial for you, and stick to the ones where benefits outweigh the associated costs. Just because you have a card doesn't mean you have to use it even if it doesn’t provide value. If the associated fees are no longer worthwhile, consider canceling.
Check your credit score
If your credit cards have a large amount of debt, then this could negatively impact your credit score. So it is essential to keep a track of your spending habits as well as your credit score. If your credit score declines massively at any given time, you should try and clear your debts as quickly as possible.
While there’s no ideal number of credit cards an individual can use, it is very important to manage them efficiently. Just because credit cards give multiple offers, one must not go overboard and apply for a number of credit cards. One must use credit cards judiciously and only when absolutely required. It can be very easy for credit cards to become debt traps if not used wisely. However, if you use them well, it can lead to numerous rewards, cash backs, discounts, etc.