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Business News/ Money / CIBIL score: Using multiple credit cards? Be mindful of these 6 key points
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CIBIL score: Using multiple credit cards? Be mindful of these 6 key points

Experts often point out that whenever possible, one should pay off your credit card balances in full every month to avoid paying interest. This helps keep your credit utilisation ratio low that can positively impact your credit score

In case you have multiple cards with annual fees, it is imperative to evaluate whether the benefits outweigh the costs. Premium
In case you have multiple cards with annual fees, it is imperative to evaluate whether the benefits outweigh the costs.

It can certainly be quite challenging to manage multiple credit cards, but if you follow right strategies, you can maximise their benefits while keeping pitfalls minimum. 

For example, setting the auto payment option ensures that you do not miss the payment, and keeping your credit balance below your credit card limit helps you keep the credit utilisation ratio within a comfortable range. 

Six practices to help you manage multiple credit cards seamlessly:

1. Keep track of due dates: Make sure you are aware of the due dates for each credit card bill. Missing payments can result in late fees and damage to your credit score.

2. Lower than your credit limit: Try to keep your credit card balances well below your credit limits. High credit utilization ratios can negatively impact your credit score and increase the risk of debt.

3. Annual fees: If you have multiple cards with annual fees, evaluate whether the benefits outweigh the costs. You may decide to close or downgrade cards that no longer provide enough value to justify the fees.

ALSO READ: Is it sensible to have more than one credit card in your wallet?

4. Auto payments: Consider setting up automatic payments for at least the minimum amount due on each credit card to ensure you never miss a payment. Just be sure to monitor your accounts regularly to ensure payments are processed correctly.

5. Full payments: Whenever possible, pay off your credit card balances in full each month to avoid paying interest. This also helps keep your credit utilisation ratio low, which can positively impact your credit score.

6. Utilise rewards: If your credit cards offer rewards or cash back, take advantage of them strategically. Use the card that offers the best rewards for specific categories of spending, such as groceries or travel.

Even if you are not using a particular credit card regularly, consider making small purchases on it occasionally to keep the account active. 

This can help maintain a positive credit history. By implementing these best practices, you can effectively manage multiple credit cards and use them to your advantage while maintaining financial stability.

Frequently Asked Questions:

Why should you keep track of due dates?

It is quite important to keep track of due dates since missing payments can result in late fees and damage to your credit score.

Why should you keep your credit balance lower than your credit limit?

This is important because high credit utilisation ratios can negatively impact your credit score and increase the risk of debt.

Why should you set up auto payments?

You should consider setting up automatic payments for at least the minimum amount due on each credit card to ensure you never miss a payment. 

How important are credit card rewards for the regular users of credit cards?

In case credit cards offer rewards or cash back, it is advised to make the most of them strategically. So, one should use the card that offers best rewards for specific categories of spending, such as groceries or travel.

How important is the annual fees in determining the usage of credit cards?

If you have a number of credit cards with annual fees, it is vital to evaluate whether the benefits outweigh the costs. So, you may decide to discontinue the cards which no longer offer value in proportion to the cost.

 

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Published: 17 Apr 2024, 08:48 AM IST
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