Most credit cardholders own more than one credit card. Like most credit cardholders, you may find that having a main credit card and a spare card ensures that you always have access to ready payment tools when needed. On the other hand, you may have a wallet stuffed with plastics that you cannot even monitor. If so, you may have asked yourself if you have one card too many, and wondered how to make the best use of your cards.
There are just as many reasons to have multiple cards as there are to have just one or two that you can manage. The truth is there is no magic number as to how many credit cards you should own. Your spending style, consumption pattern, and cash flow considerations are all factors that can help you decide how many credit cards you should have.
Here are five tips to help you decide how many and which credit cards you should keep.
1. How much credit you can handle?
Are you the type who would shop mindlessly and could not stop for as long as you have not exhausted your credit line? If so, then perhaps you should not hold on to too many cards and try to keep credit limits to levels that would not send you to financial disaster. On the other hand, if you need a large credit line, presumably to use in business or to accommodate your spending needs, then go for a credit card or cards that can provide you the spending power that you can handle.
2. Examine how you use your credit card.
Are you using your credit card for various unrelated needs? If so, it may be helpful to have separate cards for different purposes—say a card for your household needs, and a separate one for your office-related expenses. Having a separate card for your office needs will also be easier for recording purposes. If you regularly make purchases in a foreign currency, a separate dollar-denominated credit card may be handy.
3. Play your cards right.
When you have multiple cards, you will also have to contend with managing many records and meeting different payment deadlines. If you aren’t organized enough to remember payment schedules, then you are better off holding on to just a card or two. Any more will be too much of a hassle for you and worse, could even lead to unnecessary finance charges if you fail to remember your payment due dates.
4. Look at your cash flow.
Check each card’s statement cut-off and payment date and see if this coincides with your cash flow. It may be more manageable, cash flow wise, to have two credit cards with payment due dates that are two weeks apart from each other. In so doing, you can pay off each bill in full without saddling you with interest charges.
5. Check out annual fees.
While it may be nice to have a big credit line and multiple credit cards, make sure to keep an eye on annual fees. Credit card companies charge anywhere from P2,000 to more than P4,500, depending on your type of card. These fees are completely justifiable if you actually use your credit line, want to have emergency funds, and enjoy the other features of the card.
However, if you have many of these cards that are simply stacked inside your wallet, then you are throwing good money for nothing. Determine which cards are worth keeping and paying for, and surrender the rest.
These days, credit card companies are competing for your business and loyalty by offering gifts with your spend and rewarding you with points that you can redeem for a wide range of items. Make these count as you decide what to keep or what plastic to own.
Look into your consumption pattern and determine if there is a card that can offer you rebates or freebies in exchange for your loyalty. For instance, if you are a heavy traveller, credit cards that issue frequent flyer or mileage points may be useful for your purposes. If you patronize a particular store, it may be helpful to have a card that gives you points in exchange for your purchases in this store. Or if you like rebates, a cash back card might be right for you.
When choosing which credit card to keep and to let go, as with any spring cleaning project, one rule applies – only keep what are most relevant for your needs.
source: www.abs-cbnnews.com
