Tips for Managing Multiple Credit Cards in Your LifeNovember 17, 2010 - 8:56 am
There is no set number of credit cards to have on hand at any point in your life. It really comes down to your level of responsibility for using credit wisely and managing your cards in an effective, beneficial manner.
Why Have Multiple Cards?
There are so many options for credit cards nowadays and multiple cards can offer benefits consumers did not have access to in the past. With the various reward programs now being offered, people can take advantage of the different rewards program benefits. If you can effectively manage multiple cards, you can reap the benefits of cash back, incentive earnings, and other rewards all at the same time you can actually put a lot more back in your pocket each month and earn more incentive that will save you money in the long run.
How to Effectively Manage Multiple Cards
There is not one sure method that will work for everyone to handle multiple card accounts; however, here are some tips that can help you get started.
Dedicate the Cards
Most people have some form of routine for their shopping habits. By selecting the right card for the job, you should dedicate one card for each type of purchases you make. For instance, use the cash back rewards card only to purchase gas. Dedicate another card for use only on the Internet. This will not only bring you incentives, it will make it much easier to spot fraudulent charges if you continually use the same card for online purchases. Use cards for regular basis based on how the incentives work. You should be able to match up your cards to your regular shopping needs.
Automate Your Payments
It is essential that you pay close attention to your payments for multiple cards. With a busy life it can be easy to miss a payment due date. If this occurs with several cards in a month, you are looking at paying a lot of late fees and you risk a rise in your interest rate. This can be detrimental to your finances if you miss out on several card payments at any given time. To make paying your credit card payments effortless, set up automated payments for each month. This way, you are sure to never miss a payment and incur late fees. On multiple cards, late fees can be very costly.
Stash the Cash
Whenever you use a credit card, you should ideally be earmarking the cash equivalent to ensure you can make a payment in full on the credit card balance. Get in the habit of tucking the cash amount you spend on the card into an envelope and then make one big deposit that will cover your balance pay offs each month. This will not only avoid late fees and carrying balances forward, you also have the added advantage of a boosted credit score thanks to your excellent payment records.
Watch What You Close
If you have multiple cards but in actuality have too many cards to reasonably handle, know that closing accounts can be hazardous to your credit health. Only close accounts that you do not want, especially those that may charge annual fees if you have other fee-free cards. However, be cautious about which cards you are planning to close because if you end up shutting down the cards you have the longest, you’ll be shortening your credit history time length which can drop your credit score.