Credit Cards: How to manage multiple cards without hurting your credit score? Here are 11 key strategies | Mint

Many people buy credit cards to earn rewards and cash back and benefit from the same. Undoubtedly, they are a great choice for people who can manage them.

However, a lot of people struggle with missed deadlines and managing multiple cards at once seamlessly. Credit cards can be managed easily with the right strategies and careful planning.

And no, multiple credit cards won’t affect your credit score if managed responsibly.

Today, let’s explore some strategies to manage multiple credit cards without affecting your credit score.

Know each card’s limit

You must be thoroughly aware of the limit of each credit card. The limit will be set by your credit card provider based on your credit score. The better the credit score, the higher will be the limit, and vice versa.

Awareness about your credit card limits can help you manage your finances seamlessly and effectively.

It is better to keep the utilisation ratio of each card less than 30%. If your credit limit is ₹1 lakh, ideally limit your transactions to ₹30,000.

Hence, a clear understanding of your limits is crucial so you don’t overspend and you can split expenses across multiple cards.

Remember your due dates

Once you are aware of the limits of all your credit cards, you must focus on keeping a record of your due dates. Any missed payment means a bad impact on your credit score.

You can set reminders or keep a note of them in writing.

Set notification or account alerts

Most credit cards give you the option to set alerts for various card activities, such as alerts for due dates, automatic payments, spending thresholds, and account balances. Setting these alerts on can help you manage multiple cards without stressing about missing deadlines or paying off dues.

Set automatic payments

If possible, set automatic payment options for each card each month. This will help you avoid interest charges or penalties, and your credit score won’t be affected either. But don’t forget to pay off the pending amount at the end of each month because paying only the minimum amount every month can lead you into a financial burden.

Review your credit card statements

Make it a habit to check your credit card statements each month or quarter. This will allow you to notice any extra charges or penalties being levied. Also, you’ll be able to check any unnecessary expenses made by you, which can easily be cut down. A careful analysis will help you gain maximum benefits from your credit cards while also saving money on unnecessary transactions.

Use limited cards

It’s tempting to get more and more cards once you get into the world of credit cards. Having more rewards and benefits can be luring, but you must limit the number of cards you are using as it can make it challenging to keep up with payments.

Not to forget, applying for too many cards in a short span of time can also impact your credit score, so choose wisely.

Check terms and conditions of each credit card

Before applying for a new credit card, carefully assess the terms and conditions of the same. This includes checking the limits, interest charges on late payments, annual fees, and other hidden charges. Certain companies charge high interest rates on late payments and hidden costs, which it can cost you in the long run.

Avail maximum rewards

Make a strategy to use credit cards effectively by gaining maximum rewards. Cash back options, coupons, rewards, etc. can save you money when you go grocery shopping or book tickets for your vacation. But you must remember that you shouldn’t overspend just to avail of rewards.

Avoid carrying balances forward

Many people have a bad habit of paying only the minimum amount to avoid penalties. But if done consistently for months, it can lead to piling up of debt and can attract interest charges, significantly impacting your credit score. Hence, avoid carrying balances of previous months forward unless absolutely necessary.

Compare rewards and expenses

After a certain tenure, say three months, weigh the rewards and expenses of each credit card. Compare rewards in terms of cash back, coupons, free gifts, etc. with expenses such as annual fees, interest charges, and penalties. If expenses exceed the rewards earned, it’s time to let go of the credit card, or you can choose a better card that aligns with your financial goals.

Reassess your card portfolio

Every six months or so, you must carefully review your entire card portfolio and check whether you actually benefit from using multiple credit cards or not. Constant reassessment can help you make wise financial choices and manage your expenses better.

Final words

Managing multiple credit cards can be challenging if you are using them without a strategy. Using cards just for earning rewards and cash back shouldn’t be the case. By careful planning, strategising and constantly reviewing, you can easily manage your multiple cards and be in a better financial position.

Padmaja Choudhury is a freelance financial content writer. You can reach out to her at padmaja@padmajachoudhury.com.