A few years back multiple card holding was considered a status symbol. That is why ‘lifetime-free’ gold or platinum card offered to them either by their bank, airline, retailer or employer had gained popularity. But now, if you own and manage multiple cards, then you can maximize your savings and reap huge discounts. There are some points to keep in mind if you own multiple cards so that you can avoid errors, miss payment dates, etc.

Number of credit cards –

Keep a couple of credit cards which offer good credit limits which can reduce the need for many cards. Low credit limit could indicate issue with credit score or few banks are slow in enhancing the credit limit of new customers.

An expert financial planner said, “With a spate of credit card offers such as cash backs, i-mint points, etc, a customer gets convinced about signing up for an additional credit card. These offers are complicated, worded differently and are offered by most cards today. Hence, a customer should just stick to a Visa and Master Card, which are widely accepted throughout the world”.

Managing payments –

Consider all the cards you own. Try to keep one primary card to charge your expenses. Although, co-branded cards such as a petro card, airline card or a shopping card such as ICICI Bank-Big Bazaar credit card, would be used for specific purposes because of higher reward points, which would offer better mileage than a plain vanilla credit card. In such cases specific expenses should be put on particular cards and regular cards would be kept as back-ups.

Plan your billing cycle –

If the bill on the first credit card is due on 30^th March, then keep the second bill due date as 15^th April. The logic behind having a staggered billing cycle is you would get enough time to repay dues. For example, on the first credit card, the last day of the billing cycle would be 10^th March and the second one would be 25^th March. So if you have an emergency expense between 10^th and 25^th March, then you could swipe you first card as you would get longer time to settle your bill.

When the bank offers a credit card, they set a billing cycle in accordance with the issue of the card. But you have a choice to change the billing cycle to suit your convenience.

How to avoid a debt trap –

It is advisable to spend 30-40% of the take home salary for lifestyle and living expenses 30% on consumption loans (including home loans, if any) and rest savings.
It is trouble if you are unable to pay the outstanding amount on credit card. The monthly interest rate charged on a credit card is between 3% and 4%. If you are unable to settle the balance even in the second month, the jump in the outstanding balance is very steep. So it would be advisable to liquidate some low yielding instrument in the first month itself. (For example, a FD may offer just 7-8% over a year, which is much lesser than 40-50% rate charged on a credit card on an annual basis).

Points to remember:

• Use debit cards for regular expenditure to keep tab on spending.
• Credit card has wider acceptance (online booking, phone booking, paying utility bill payment, etc.)
• Frequent car/bike users opt for petro card as regular card (debit/credit) may charge additional petrol surcharge or opt for cards which offer petrol surcharge waiver.
• Keep separate card holder for safety of cards in case of loss of wallet.
• Maintain fewer cards but with sufficient limit as it is easier to keep track of expenses.
• Link your credit card to your net bank account. It will make payments easier and it would show unbilled transactions (so you know what you would be paying the next time).
• If you are unable to pay over or just the minimum balance every month, it implies that you could be approaching a debt trap.
• Arrange your bill payments in such a manner that you get a breather in case of unexpected expenditure on any particular card.
• Opt for online payments to avoid penalty on late payments (due to delay in cheque clearance or typing errors in cheques). You can also opt for the ECS mode if you have steady bank balance.
• Choose e-Statements,  it not only saves paper but also takes care of issues like late/no dispatch of bill which could further delay the credit card payments.

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