How to Manage Your Multiple Credit Cards and Make Better Savings
Get rewards from your multiple credit cards
There are various reasons why people may wish to hold multiple credit cards, and if managed sensibly they can actually bring great benefits which can potentially save you money in the long run. However, it is extremely important to keep track of each card so that the debts don’t become unmanageable.
When it comes to making the best use of multiple credit cards, it is worth knowing that some credit cards offer incentives such as cashback, reward points, and even Air Miles, that are awarded whenever a card is used to make purchases and payments. Therefore, it is important that your credit cards are suited to your personal shopping habits, so that you can switch between the cards to make use of their incentive schemes.
Another effective way of using multiple credit cards is to assign different cards to specific purchases, such as one for online shopping, and one for holidays. For example, shopping online is becoming increasingly popular because it is quick and convenient, especially for people who have busy lifestyles. However, there are certain risks when it comes to making online purchases where using a single credit card can come in handy.
One of the things you should be wary of when shopping online is fraud and identity theft. Although the risks of this are relatively small, using a single credit card for online purchases makes it easier to spot fraudulent activity, so you can get it sorted as quickly as possible and limit any damage.
When going on holiday abroad, it is also a good idea to have a spare credit card with you in case your main one gets lost or stolen. An option would be to keep the spare in a secure place such as your hotel safe, as it can take several days or even weeks to get a replacement, especially when you are not in the UK. When you decide which of your multiple credit cards you are going to use for holidays, remember that not all cards are accepted across every establishment in every country.
The best ways to keep on top of your accounts
If you do use multiple credit cards, it's important that you manage your accounts effectively to avoid any excess charges on top of any interest owed. It can also be easy to run up problematic or unmanageable levels of debt if you do not keep track of your spending and repayments across multiple cards, so we’ve come up with some tips to help keep finances organised.
If you have accumulated a number of credit cards over your lifetime and are worried about how to keep track of them, it could be a good idea to make calendars or diaries which remind you exactly when payments need to be made for each card. This way, you will soon get into a routine of paying off the minimum amount for each card every month, so it doesn’t come as a surprise.
It is important to remember that if you have made a balance transfer or are currently enjoying a promotional or introductory offer with one or more of your credit cards, it is likely that you will be paying a better rate of interest on any outstanding balance. Missing a payment may breach the terms and conditions of these offers, and the rate applied to your balance may revert to the credit card's standard rate. Again, it is vital that you know exactly when any payments need to be made so that things like this don’t happen.
Luckily, most card providers will issue payment reminders a few days before your due date, so along with your personal reminders it shouldn’t be too difficult to stay on top of things. It is also a really good idea to set up a direct debit if possible, so that you don’t actually have to remember to make the payment yourself. This can be for the full balance, the minimum payment, or whichever amount suits you. Once you’ve got yourself organised, keeping track of your multiple credit cards should be easy.
How do multiple credit cards impact your credit rating?
Your credit rating is based on data compiled by credit reference agencies, and can help determine whether you are successful in applying for various types of credit, including a personal loan, mortgage or a different credit card.
If you do miss making a minimum payment on any of your credit cards, this will have a negative effect on your credit rating. This is because credit reference agencies look at various things including the amount of debt you currently have, and the amount of credit you have available to you. This means that even if you do not owe money on multiple credit cards, the credit limits available on them could potentially impact your credit rating.
Remember that simply paying off the balance of a card will not remove it from your credit report. To help stop your multiple credit cards affecting your credit rating, make sure you close the account for any cards which you don’t wish to use anymore. You may also be able to request that your credit card provider lowers your credit limit, if you don’t need the amount which was initially on the card.
What are the benefits of making a balance transfer?
A balance transfer allows a customer to transfer the money they owe from one credit card onto another. This is another advantage about having multiple credit cards; if one of your cards offers a lower rate of interest, it allows you to settle the outstanding balances on one card to a different one with a lower interest rate.
Some credit cards offer low interest rates on balance transfers and introductory rates may be as low as 0%, so these ones are great if you are thinking of making a balance transfer. However, there may be a fee for making a balance transfer and most introductory rates have a limited duration. Make sure you know exactly when this time is up, so that you can make the transfer while the interest rates are still low.