Credit where itís 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...

time without defaulting.

No balance transfer willy-nilly

Some people transfer balance from one card to another randomly. While balance transfer is a great tool to leverage interest payment, it should only be done when needed. Constant balance transfers not only hurt an individual's credit score, but also impact financial disciple in the long term.

Split your purchases

Credit card companies charge users if the card remains non-operational for over a year. There is no point holding a credit card if you donít use it for purchases, transactions or payments. Make sure you split your purchase between various credit cards to avoid any non-usage charge.

A lot of people purchase stuff using credit cards to avail cashback facilities and reward point programmes that card issuers offer. Make sure you are aware of the minimum purchase required for entering such programmes. One can split oneís purchases, in accordance with the reward programmeís conditions, if needed.

Cards that suit your needs

Many people commit the cardinal sin of opting for every credit card offered by a bank or the credit card sales personnel. Pick a credit card keeping in view your individual needs.

If, for example, you use your card a lot for grocery shopping, a co-branded credit card with a retail chain may be a better bet than a credit card offering more rewards on petrol purchases or international air ticket purchases.

Remember, having a credit card can help you build your credit score but only if it is used judiciously and wisely. People with multiple credit cards must make it a point to check their credit report frequently to avoid any negative impact on their credit history.

The writer is CEO, BankBazaar.com

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