The advent of technology and spur in cashless transactions & online payments have mandated having a credit card and debit card. People ask too often how many credit cards should they have? Many financial planners and friends suggest using one card in the fear that the holder may get into perpetual cycle of debt. However, it is just a myth. Here are a few things you will enjoy if you have multiple credit cards.
Interest-free period for more months
Every credit card has an interest free period on all your purchases. For example, if your billing cycle ends on 30th of every month and you have 3 weeks to make the payment, then the time from the date of purchase is called your interest free period.
If you have another card whose billing cycle ends on 15 of every month, then you can juggle your expenses and smartly maximize the interest-free period. You can use the first card till 15th and then switch to the other card after 30th.
Dodge extra interest after rollover
Once you have passed the interest free period on your credit card then sometimes you have the option to pay only minimum payable balance i.e. 5% or something.
In such a situation, the credit card provider only charges up to 2-3% on the unpaid amount and on new purchases of that month. You can save these extra 2-3% of interest rate by using another credit card.
Lower rates for Balance Transfer
That is not all, avoid paying high interest rates on unpaid credit card bills with another credit card. There are many credit card providers that allow you to transfer your unpaid balance to their cards for a longer interest-free period.
You might think that this might cost the same. But no, it usually is 1 to 2% cheaper per month -relatively lower than paying 2-3% per month. However, don’t make this your habit. You can get into a debt trap.
Best deals are yours now
You might have seen that you get lots of messages from your credit card provider. Some of them are for limited periods or for longer durations, but they can be quite lucrative. Different cards are good for different reasons, one may have better fuel rewards point, other may have better airways rewards point.
ICICI Bank and Citibank offer lucrative deals on booking hotels co-sponsored by MakeMyTrip.com. With more than one card, you increase your chances of grabbing these deals, whenever available. Choose credit cards that align best with your spending pattern.
An alternate payment option
Cashless payments can be convenient but technical problems are prevalent also. In such cases, having a second credit card can be helpful. This is extremely useful when you are travelling with less cash in hands.
Improve your credit score
Credit utilization ratio plays a very important role in calculating your credit score. It is defined as the outstanding balance across all your credit cards divided by the total credit limit on all active credit accounts.