How to use multiple credit cards without jeopardising your credit score and budget

Judicious use of credit cards can help you build and boost your credit score. This, in turn, creates the potential for future credit sanctions at affordable rates and favourable borrowing terms. Apart from paying your dues on time and paying any outstanding bills in full, you can take other measures to save money, enjoy perks and increase your creditworthiness.

Here are 4 ways to help you capitalise on the full potential of multiple credit cards.

Credit cards come in different varieties to suit various types of users. A travel credit card offers air miles or hotel booking discounts with partner sellers, a cashback card offers you a certain sum back after your purchase on specific categories of spends, and a retail credit card gives you benefits on online and offline shopping. However, since you normally find yourself making all kinds of transactions, not limiting yourself to only buying the latest smartphone or electronics or simply booking flight tickets, limit one type of card each to your wallet to make the most of your diverse expenses.

The next step is to get specific about the actual rewards you get. For example, a credit card from a well-known provider offers golf club benefits while another popular card allows you to save on fuel purchases while granting you reward points for the same. There are other cards in the market that offer dining discounts along with fuel surcharge waivers, while some offer exclusive perks when you use them to book movie tickets at prominent multiplexes.

Since different cards offer different perks, choose them based on the variety of things you normally spend on. This way, you can maximise your savings and add value to all your spends.

Swiping smartly is the key to managing multiple credit cards. Remember, your goal is not to pay any interest on a credit card purchase. Thanks to the interest-free window of a credit card, you can repay your dues within this period without shelling out anything extra. All it takes is a little planning.

For example, you can use one card with an earlier billing date for the purchase of fuel and groceries at the start of the month and another card with a later billing date for online shopping expenses.

With your purchases falling in two or three different interest-free periods you can benefit from a longer interest-free timeline too. For best results, look closely at the billing cycle and interest-free period of credit cards when choosing them. In an instance when you have unpaid dues on one card, you can use the other to avoid the extra 2%–3% interest on fresh expenses along with the existing dues. Keep in mind that some issuers also allow you to transfer your credit card balance without charging any fees for up to two months.

 Using just one credit card or focusing your spending on one of the three cards is not a good move when it comes to your credit utilisation ratio. If you are reaching the credit limit on one card, it’s time to reduce your dependency on it and spread your purchases across cards. A manageable threshold is using 20-30% of the credit limit in each billing cycle.

Monitor your usage and keep it within this percentage to keep your credit utilisation ratio low. Why is this important? A low ratio means that you are not credit hungry and use credit responsibly – things that boost your credit score.

Use these foolproof tips to eke out benefits from multiple cards for as long as possible without having to pay a price for the same!