How to make the most of multiple credit cards

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Updated: March 12, 2019 5:34:05 PM

People owning multiple credit cards should know how to manage their cards properly, or else it can adversely impact their credit score.

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Providing instant credit with an interest-free period, credit cards fulfill several needs of all. Not only that, but you also get subsidized access to your preferred lifestyle, along with rewards such as cash back and discounts. Though credit cards can disrupt your financial life, if not used properly, having multiple credit cards gives you access to a larger set of rewards, deals, and discounts. Owning multiple credit cards provides you with an enhanced lifestyle, the chance to improve your credit history and tremendous spending power. However, with multiple credit cards, you need to be more careful about how much you spend on each card and whether you will be able to settle all your dues promptly. Experts suggest people owning multiple credit cards should know how to manage their cards properly, or else it can adversely impact their credit score.

If you are also planning to get your second or third credit card, know how to manage them better:

How many credit cards should you own?

Though there is no ideal number of credit cards that one should own, experts suggest one should be able to juggle them, and extract most out of the cards and simultaneously repay their dues on time. One should stick to one card for a period and use it well rather than trying to get multiple cards at once. However, if you find this card failing to provide you with essential service, you can then get an additional card that does so. Also, multiple cards prove to be handy during a cash crunch where you have a temporary need for money but don’t want to apply for a loan or borrow money from anyone.

Effect on credit score

Each time you apply for a new credit card, an inquiry into your credit history is initiated by the bank or lending institution. This inquiry affects your credit score, hence it is advised to stagger your credit card or loan applications. For people owning multiple credit cards, industry experts suggest instead of spending the whole amount from one card for a bigger purchase, one should divide the expenses among different cards. The prudent use of multiple cards this way will impact your credit score positively.

Variety of benefits

Every credit card comes with a unique proposition. For example, one card might offer dining benefits while one may provide you complimentary access to golf courses. Another may provide you a reward for shopping with one brand or for sticking to one airline. These offers vary from one card to another. Travel cards generally provide annual complimentary airport lounge on international visits, while another may offer lounge access only at domestic airports. Note that all of a card’s rewards and benefits might not be useful to one person. Therefore, when getting an additional card, make sure that its offerings are useful to you.

Transfer card balance

You might also consider a transfer of balance if you have pending dues on your credit card. With a new credit card, some companies allow transferring of the balance and you can repay it at a lower interest rate. For example, your first card might charge you 4 per cent a month on your balance, while the new card for a limited period lets you pay at 1 per cent. However, you may have to pay a processing fee for the transfer.

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