How to manage multiple credit cards

Using multiple credit cards can be a convenient way to manage your money – especially if you’re looking for more flexibility and rewards than a single card can give you. But there are also potential risks involved. 

So, here are our tips to help you stay in tip-top financial shape.

Make the most of interest-free days

Credit cards tend to have high interest rates, but most cards also have an interest-free period on purchases (usually up to 44 or 55 interest-free days). By paying your balance in full before the due date, you won’t pay any interest. Otherwise, once the interest-free period is up, you’ll start paying high interest on the remaining balance.

Quick tip: Make sure you check the interest-free period on your existing cards, and always before applying for a new card. 

Factor in the annual fee

Annual account fees vary widely, depending on the credit card. Some have no or low fees, while others charge up to $300 or $400 – often in exchange for higher rewards. So, if you use more than one card, fees can quickly add up. 

Quick tips: 

• • • • • Check the fees on your existing credit cards.

        • Get rid of credit cards you don’t use to stop paying the annual fee.

        • When applying for a new credit card, choose one with no or low fees (unless the rewards are worth it). 

Keep track of your payments

As we said, using multiple cards can be convenient, but it can also be easier to miss a payment. By staying on top of your payments, you can avoid interest costs and late payment fees. Plus, it will help you keep your credit score healthy. 

Quick tip: If you find that you tend to forget due dates, it’s a good idea to set up automatic payments or payment reminders on your calendar.

Use cards to boost your credit score

Are you looking at getting new finance soon? When you apply for a loan, the lender will consider your credit score. This is based on your financial payment history, including how much and how often you’ve borrowed in the past. 

A good credit score indicates to lenders that you’re reliable with managing money. And importantly, for your credit score, how you use credit cards is more important than the number of cards you have. 

Quick tip: Just like late payments can have a negative impact on your credit score, paying all your bills on time is the best way to build good credit. The other factor is credit utilisation, which is the percentage of your total credit card limits you’re currently using: if you get more cards, make sure your credit utilisation stays the same.

Repay existing debt if looking at new finance

Whether you’re looking for your first mortgage or a new loan, any debt you currently have will reduce your borrowing power. And so will your credit card limits, even if you don’t use them. 

Quick tips: 

• Focus on repaying as much of your credit as possible.
• Reduce your credit card limits to the minimum.

Use cards for different purposes

There are benefits to using more than one credit card. For example, you can take advantage of multiple interest-free periods, and get a wider range of rewards. Another efficient way could be to use different cards for different purposes. For example, you may pay big-ticket items with a low-interest rate card, and a different card for everyday purchases. 

Quick tip: Always check the fees and charges looking for a more cost-effective way to manage your cards. 

Consider consolidating if needed

In some cases, rolling all your debts into one payment may make your life a lot easier – so you can focus on clearing one balance instead of many at the same time. 

This is what ‘debt consolidation’ is all about. Debt consolidation loans usually have a lower interest rate and a longer repayment period. But remember: the longer the term you choose, the more interest you’ll be paying. 

Quick tip: Find out the total cost of consolidating (including the overall interest cost) before signing up. Plus, read the fine print to make sure there aren’t extra fees and charges involved.

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Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.