How many credit cards do you own?
I own about four credit cards but I use two credit cards very frequently.So, I may own four, but I only use two credit cards when it comes to running any charges on it.
So, you have four, but then you actively use only two of them. So, what is this kind of strategy? Could you also unveil that a bit so that it will be helpful for all those viewers who are into having multiple credit cards? You know how banks are selling credit cards these days, keeping the festive season and the time when people splurge a lot in mind?
So, honestly, there is just one answer for it which is that prior to owning credit cards as entitled one may feel acquiring those, the key is to do a proper budgeting analysis and understanding your propensity or your ability to pay.
For example, in my instance, I am using two credit cards, one primarily for putting up any expenses and one for travel. There are travel rewards associated with a card versus the other one is for my other expenses and that is what I would advise to consumers as well that it does not give you points to own four or five credit cards. The key is to identify your needs. What is it that you will have the ability to pay in full at the end of the month? Just own those many credit cards and keep one for rainy day expenses but as long as you are financially disciplined. Credit can be a great asset for an individual, but if not handled wisely, can soon turn into a big debt trap.
So now, even if you are a person who has multiple credit cards, I am talking about having five to six credit cards. What kind of problems will you have if you have so many credit cards in your wallet? Also even if you want to diversify in this particular credit card portfolio of yours, how well can you diversify?
While using multiple credit cards, unless you have figured out the strategy of how much charge to run on which credit card, unless and you have the discipline of repaying the balances in full, at the end of every billing cycle, there are chances that you will end up rotating a balance and that is where the debt trap begins.
Any person who is using the cards wisely, I would say, if you are using a travel card for your air travel, for the miles that you accrue, for the lounge access, for the frequent flyer tiers that you get, it is very advisable if you travel on a regular basis. Similarly, if you are shopping and dining on a regular basis, a lifestyle card from American Express or other issuers is a great tool to have because it ends up giving you a lot of rewards, a lot of discounts, a lot of preferential treatments at some hotel and restaurant chains.
But if all this is not planned wisely and you end up at a point where you are not paying the balances in full and end up rotating or worse yet making minimum payments. That is when it can become a negative spiral for a consumer.Also let us just focus on the kind of credit cards and the kind of reward points and offers with which banks are trying to lure people. It is the season where people like to go out and shop and splurge. What kind of offers or reward points do you think are in trend these days which people are wanting to opt for?
There are these great no cost EMI offers, zero cost EMI offers, low interest EMI offers. There are some bank partnerships tie ups that you get. There are going to be a plethora of options. My advice to your viewers would be that if you have a reward point, look into your reward points, look at what kind of rewards or points that you can redeem while shopping. Shop early and use discount coupons. It is important to understand the difference between a low cost or a zero cost or just a plain EMI. Once you understand all that, once you have an understanding of all that and looking at the terms.
The third thing I would like to mention is just because it is a holiday season and of course, brands will be trying to lure you with incredible offers, it is not a good idea to start applying for cards. Exercise some control on spending. If you must, then please have a proper repayment strategy in place because this is the time when people end up running a huge charge on their cards and struggle with repayment.
My strong recommendation would be, look into the reward points, look at the points that you can redeem while shopping, try to shop early and not at the last time. Use these price alert tools, which alert you for an item that you have been eyeing to buy when it has the lowest price on offer. So look at those offers, look at your low cost or a no cost EMI, or a low interest EMI that you have taken and try to reduce that tenor to as short as possible. This way you will end up paying the least amount of interest.
