Golden rules for prudent handling of multiple credit cards

Credit cards have both advantages and disadvantages. If used prudently, a credit card can be very useful. If not, it can lead to a pile of debt. The fear of overspending increases when you have more than one credit card at your disposal. Money9 offers a brief guide on how to handle multiple credit cards. First and foremost, do not carry forward your balance of any credit card. Credit cards generally levy higher interest rates that can even be as high as 30%. Any interest you pay will offset and may even nullify the value of rewards you earn with a card. So, try to pay it off within the stipulated time period.

Pay balance on time

Along with paying off the balance each month, you need to be sure you are making your monthly payments before the due date. An automatic, online bill-pay system can be ideal for this purpose.

If you miss a single date, high interest rates would be levied. You should be very cautious and particular about the payment date.

Spending limit

Experts always advise to spend wisely. Don’t ever spend more than 50% of the total credit limit at one go and never ever exhaust 100% of your credit limit. Try to keep it within a maximum 80% of the credit limit.

Pick the right card

Perhaps the most challenging part of having multiple credit cards is maximising rewards points and cash back offers. It is also important to pay attention to the features of each card that might include double cash back or double reward points offer. It will ultimately help you to make the burden a little bit lighter because each cash back and reward points turn into Rs 1 or Rs 0.50 while paying the credit card dues.

Spend in interest-free period

Try to spend within an interest free period. This is the period between the date of a credit card transaction and the due date of repaying the bill. During this time, zero interest is charged on credit card transactions, except ATM cash withdrawals.

However, this rule is applicable only when you repay the entire bill amount within the due date.

Compare EMIs

You should always compare the equated monthly instalments (EMI) options and offers on various credit cards before applying for a new one.

If you buy a mobile worth Rs 40,000, then go for that credit card which offers zero EMI offer rather than the chargeable one.

According to Reserve bank of India (RBI) data till June 2021, the total number of credit cards in the system stood at approximately 6.4 crore. In June alone a total of 16 crore transactions valued Rs 63,000 crore took place in the country.