how to effectively manage multiple credit cards
How to Effectively Manage Multiple Credit Cards
For those who find it hard to manage their sole credit cards, handling multiple ones might sound overwhelming and rightly so. However, for many, it can be a viable option for increasing their credit score and cashing on reward points.
According to the Center for Media Research, 51% of Americans have at least two or more credit cards.
Managing multiple credit cards is not meant for the fainthearted, nor is it the safest option for the spendthrift. However, for those who are well-versed with the art of saving and monitored spending, availing more than one credit card can be a cost-effective option. There is a common misconception propagated by some financial analysts and consumers, that using more than one credit card can spell trouble, and must be canceled once and for all.
However, very few will tell you that using your credit cards wisely can help increase your credit score and creditworthiness. Of course, if the cards are used unwisely, it would be merely a matter of time before consumers find themselves in some serious debt. This Buzzle article discusses how to effectively manage multiple credit cards.
How to Manage Multiple Credit Cards
Credit experts advice consumers to always opt for a zero balance credit card, which they must keep locked away in a locker or someplace, where they won't feel the need to use it at all. This way, the card can be used in case of dire emergencies, such as when an existing credit card is stolen, lost, or breaks. In such situations, the zero balance card can be used as a backup, while the previous card is replaced.
The advantage of owning more than one credit card is, that each of the cards can be used for a specific purpose, or alternately. While one card can be used for incurring daily expenses, the other can be used for big expenses or paying for emergencies.
Most cards offer reward points for certain specific commodities and services, and therefore should be used accordingly. For instance, one credit card may offer more reward points for fuel or booking tickets, and thus, must not be used for groceries or cash-back services. Having multiple cards will offer many types of reward points, which can help minimise expenses to a large extent.
Consumers can avail credit cards with lower interest rates, so that they are able to save on their interest fees and increase their savings every month. Going for cards that offer minimal or 0% introductory rate for purchase and balance transfers for a fixed period of time, can not only help consumers save but also monitor their expenses. Secondly, knowing that a low interest rate exists can be a source of great comfort for those who are unable to pay off the bills for a month or two.
The other advantage of opting for balance transfer is that, you can transfer the funds from a high credit rate card into a lower rate card, so that you can manage your debt better, and pay off outstanding payments at lower interest rates. This practice, along with making your payments on time, will help improve the credit score.
Having multiple credit cards with lower limits on spending can deter people from spending recklessly and purchasing things that are not on their shopping checklist.
Some credit card companies do not charge late fees or increase the rate of payable interest after a late payment. Instead, after the fixed period of lowered interest is over, they assess the consumer's credit score and report, and thereafter, ask for a certain annual percentage rate (APR).
You must keep a check on the due date for payment of various credit cards. It is better to opt for the earliest date for making the payments, so that no credit card is missed out and left unpaid. The easiest way to make payments on time is to opt for Internet banking facilities that are not only faster, but are also guaranteed.
The second advantage of using multiple credit cards for Internet banking is that, it can be used for specific transactions, such as shopping and booking tickets. Such transactions, being specific, can be easily monitored and traced for any kind of theft or illegal activity against the owner of the credit card.
Request the credit card companies to narrow down the number of due dates to 1 or 2 specific days in a month. Choose these days according to the day you receive your paycheck or transfer money into your checking account, so that the monthly credit payments can be made every month from your account without fail.
The advantage of applying for automatic debit facility is, that the credit card companies deduct the monthly payments from your account and inform you about the transaction. This way, you do not have to worry about making the payments on your own, or fear the possibility of making late payments. However, make sure you have sufficient and steady balance to honor your monthly payments, before you go in for this option.