Managing multiple credit cards? Points you should keep in mind

Having multiple credit cards may help you enhance your financial flexibility and maximise rewards, but they should be handled with care. As more consumers turn to credit cards for their purchasing needs, understanding how to effectively manage several accounts is crucial.

 

“Managing multiple credit cards can be a daunting task, but with the right strategies, you can maximise the benefits while minimising the risks. To start with, it is essential to keep track of each card’s due date, interest rate, and rewards program to avoid missing payments and accumulating debt,” said Rajesh Katoch, CEO at EZ Capital.

 

Points you should keep in mind while managing multiple credit card

 

  Set a clear budget

  Before utilising multiple cards, assess your monthly income and fixed expenses to determine how much you can afford to spend. This proactive approach helps ensure that you can pay off your balances in full each month.

 

Utilise automatic payments

 

One of the most effective strategies for managing multiple credit cards is setting up automatic payments. This feature allows you to automate bill payments from your bank account, reducing the risk of missed payments and late fees. 

 

Monitor credit utilisation

 

Credit utilisation -- the ratio of your outstanding debt to your total credit limit -- is a critical factor in determining your credit score. Aim to keep this ratio below 30 per cent across all your cards. High credit utilisation can harm your credit score, spreading expenses across multiple cards can help achieve this goal and improve your credit score over time.

 

Choose cards wisely

 

Not all credit cards are created equal. Each card often comes with unique benefits such as cashback rewards, travel points, or discounts on specific purchases. When selecting which cards to use, consider what benefits align with your spending habits.

  Debt trap awareness

 

The convenience of multiple credit cards can lead to overspending. Financial advisors warn against treating credit cards as an extension of income. Each swipe is essentially a short-term loan that needs to be repaid. Maintain a disciplined approach by:

 

Tracking expenses meticulously

 

Setting personal spending limits

 

Avoiding impulsive purchases

 

“To get the most out of your credit cards, pay off high-interest debt first, and use rewards and cashback offers that match your spending,” Katoch said.