By- Sanya Oberoi
Sometimes we are short of funds to meet urgent financial obligations. Taking a loan is a big financial commitment and often has an extended processing time, and asking friends and relatives is not always the right choice. This is where credit cards come into the picture. Credit cards offer an easy way to manage short-term financial obligations. Depending on the credit limit, one can handle many urgent expenses. Lenders provide different types of credit cards to help people make the most of their shopping habits. However, it can get challenging to manage multiple credit cards. Read on to learn about common challenges and tips for managing multiple credit cards.
Challenges in managing multiple credit cards
Here are some of the most common challenges faced by people who own multiple credit cards.
1. High risk of debt compilation
Owning multiple credit cards can seem lucrative as users can access multiple credit lines. However, it can lead to a debt trap. Multiple credit card debts can be hard to manage when piled up. Credit card users will have to keep a tab on various billing cycles, due dates, and other aspects of using a credit card. The probability of debt compilation is higher when multiple credit cards are involved.
2. Credit score reduction
Owning multiple credit cards can lower your credit score. Applying for numerous credit cards within a short period will reduce your credit score because of hard-line inquiries. However, there are no grave long-term consequences on the credit score.
3. High annual fee
Credit card issuers charge an annual fee from card users for owning the card. Having multiple credit cards will increase your expenses on account of annual fees. However, in many cases, the annual fee is often reimbursed after reaching an expense benchmark. The best credit card in India will refund annual fees if certain terms are met.
Tips to effectively manage multiple credit cards
Here are some practical tips to help credit card users manage multiple cards.
1. Keep a check on the credit limit for each card
Managing multiple credit cards is not easy. It is crucial to check the credit limit for each card whenever a transaction is made. Overutilizing the credit limit on a single card can result in a poor credit score. It will reflect poorly on the credit history. A lower credit score will also impact your chances of increasing the total credit limit.
2. Choose the right credit cards
Choosing the right set of credit cards is crucial to managing each effectively. The credit cards you select must provide you with lucrative discounts and deals based on your shopping habits. It is vital to assess your shopping patterns and habits before choosing a credit card. In addition to discounts and deals, it is crucial to learn about the interest rates, annual fees, and other charges associated with different credit cards
3. Don’t spend money just to get rewards
Spending money on different credit cards just to get reward points is a shortcut to a debt trap. You must not practice this. It might seem lucrative to spend a fair amount on multiple credit cards just to get rewards, but it’s not a sustainable way to manage credit cards.
4. Set bill payment reminders
Setting bill payment reminders is a great way to avoid defaulting on credit card bill payments. Credit card issuers have varied credit card bill generation policies and due dates. Learning about the due dates and minimum due amount for each is essential. Setting reminders is vital to avoid credit card bill payment defaults.
5. Try to avoid carrying a balance
You must avoid carrying a balance on the credit cards from one billing cycle to the next. Most reward-based credit cards charge a higher interest rate that you should avoid. Carrying balance for the next cycle can quickly lead to a massive pile of debt because of hefty interest charges.
6. Pay your dues timely
It is essential to pay your dues timely to avoid any unnecessary burden. Paying back the due amount timely can help you boost your credit score. This will make you eligible for a higher credit limit.
7. Look out for fraudulent transactions on credit statements
Analyzing credit statements regularly can help you avoid fraudulent transactions. At times, these fraudulent transactions and billing errors can contribute massively to credit card bills. Keeping a check on these transactions on different cards can save you a lot of money. Credit card users have up to 60 days to report these transactions.
Credit cards are indeed a useful financial tool to overcome financial emergencies. However, having too many credit cards can land you in trouble. It is important to opt for credit cards after analyzing your shopping expenses. Timely bill payments are a must and avoid carrying a balance for the next billing cycle. Apply for a credit card today!
Disclaimer: (This article is sponsored and includes some commercial links)