Do you carry more than one credit card? Do you feel flustered managing their reward points and payment schedules? If yes, trust me you are not alone in this! Almost all of us feel bogged down while managing multiple credit card accounts. And why not, because any wrong done in handling these credit cards can either lead to penalties or you might end up with a damaged credit score.
While there is no rule behind how many credit cards one should have, paying a little bit of attention can make you an efficient “multi-card handler”. Here is a list of useful tips:
- List your cards: First off, jot down all your credit cards, the due amount, interest rates and the due date. Creating this table might seem like a stretch, but trust me, this table is going to go a long way in helping you decide which card to keep and which not. Also, if possible, mention the key benefits of each card, so that you can assign each of them a particular expense type, such as fuel, travel, dining, groceries, etc.
- Consolidate accounts: Now that you know which card is burning a hole in your pocket, you need to see how to consolidate accounts and get rid of that debt. Get a balance transfer card and bring all your high-interest debts under it. Once you transfer high-interest to a lower interest one, your immediate outgo will reduce slightly. However, don’t mistake this for a solution, as the goal should be clear off debt completely.
- Get rid of balance: The best way to build a good credit score is to not carry balance and make prompt payments towards your credit card dues. With multiple card payments to be made, give preference to cards with highest interest rates and then move to paying off the one with the lowest rate. In other words, the debt avalanche method. But you can also go for a debt snowball method, wherein you pay off the lowest debts first and move your way to the highest. Opting for either will help you get rid of the pending balance faster while making sure that you save money on the interest.
- Make it on time– Discovering an unpaid bill in the stack of old mails sounds bad right? So prevent such occurrences, by paying bills soon after they arrive. If you find it difficult to keep track of multiple due dates, get the due dates changed by contacting your card issuer. But even then, don’t make the due date same for all credit cards. For example, if you five credit cards, choose from 1st to 10th for two cards, 10th to 15th for one card and 20th to 31st for the remaining two cards. By consolidating the dates, you’ll be more in control of the usage and outflow.
- Automated Payments– If paying bills is not your cup of tea, you can always opt for automated payments from your checking account to credit card companies. But make sure you keep sufficient money in your checking account, if you do not wish to incur any overdraft charges.
- Gauge your requirements – Don’t succumb to all the exciting offers that come with a credit card. Write down your areas of expenditure, i.e., where do you tend to spend more on – groceries, fuel, (travel) tickets, dining. Accordingly, choose the credit cards most relevant. Having multiple cards is good, but having cards with overlapping benefits or no benefits at all is best avoided. Picking the right card each time will maximize your rewards with each purchase.
- Don’t spend with the motive of getting rewards – Spending more to chase rewards has never been a good idea, and you may end up with a terrible credit card debt by doing this. So while having more cards gives you more credit limit and a range of rewards, you must not spend money you don’t necessarily have. It’s best to spend to the extent you can repay. Also, spending more means using up more of your available credit limit which, in turn, presents you as credit-hungry and reflects negatively on your credit report.
So to sum up, when you apply for a credit card, be aware of your requirements and charges applicable on it. The key towards following the right financial track lies in being responsible and organized. When you keep a track of your credit utilization ratio, billing cycles and expenses, juggling multiple cards will be no longer daunting.