Credit where it’s due

Jun 13 2014, 15:21 IST
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SummaryHolding multiple credit cards is a double-edged sword unless you practise extreme caution...

The ease and convenience of using a credit card, along with the spiel of reward points, often lures people into accumulating multiple cards. Holding multiple credit cards per se is not wrong, but the decision to opt for one must be accompanied by thorough research and judicious usage — sometimes even non-usage for more than a year can mean a penalty or attract significant charges.

Managing multiple credit cards can, therefore, be tricky. Let’s look at the various ways to optimise the benefits while limiting the damage.

Read the terms carefully

The first step in making the most out of credit cards is understanding the terms of service of usage. Most people with multiple credit cards don’t read the terms of service booklet that comes with the credit card, relying simply on what the sales executive tells them verbally. Going through the terms of service gives a clear picture, ranging from the interest rate to other charges to the interest-free credit period.

The terms also mention the minimum amount one needs to spend with the card to be eligible for benefits and perks. Credit cards charge a yearly fee for non-usage. Reading the terms of service tells one how to maximise benefits and keep debt in check.

Automate monthly payments

Owning multiple credit cards is like walking on a double-edged sword. One small mistake and you could fall into a vicious debt trap. The best way to avoid this is to automate payments for each credit card by linking them to your savings bank account.

In fact, the worst a credit card holder could do is default on monthly payments. Since interest rates on credit cards are very high, it’s imperative to cultivate the habit of avoiding loans or rolling over dues. Make purchases judiciously, and buy only those things you can easily pay for by the due date.

Using the ECS mechanism also ensures that your credit card dues are paid automatically, even if you don’t have access to a computer or internet for a few days.

Track statements online

People with multiple credit cards are likely to miss a bill or two in a month. To rule out the possibility of misplacing a bill and defaulting on payments due to busy work schedule or holidays, one must always track one’s statements online.

If you are someone who requires constant reminders, ensure that you set a monthly reminder on your calendar or mobile phone to make all payments on

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