Own Too Many Credit Cards? Tips To Avoid Falling Into Debt Trap

Credit cards could be helpful for financial emergencies or when you are running out of cash. Amid the credit card boom and the rapidly rising digital lending landscape availing a credit card has become quite convenient these days. While credit cards could be useful in a cash crunch, uncontrolled spending could also land you in a financial crisis.

Most credit card issuers are trying to offer customized cards with unique features to attract to increase their customer base. It could be lucrative to have multiple credit cards with features like discounts, cashbacks and reward points. However, unrestricted use of credit cards could lead to a debt trap, especially when you own multiple cards. Various reports indicate rising credit card defaults in India in recent years, especially among millennials and young professionals.  

If you own multiple credit cards, managing your finances could be bit tricky. You need financial discipline and well-planned strategies to maximise the advantage of your credit cards. Here are some tips to manage multiple credit cards without falling into a debt trap:

Various credit cards are suited to different purposes. For example, one may be meant for luxury shopping while another could be better for day-to-day expenses. So, whenever you decide to get a credit card, first check if it suits your requirements. You can only make the most out of the credit card. However, before picking a credit card it is advisable to analyse the interest rates and other fees charged by the card issuer.

You must track the due dates for payments on all your credit cards. It helps you avoid penalties and keep your credit score healthy. For easier management, you could align the due dates for all your credit cards into a specified week or period of the month.

Paying the full balance on each card by the due date helps you avoid interest charges. If it is not possible to clear the entire debt, try to pay as much as possible. You can go for high-interest cards to keep debt accumulation low.

It is important to be clear about your budgets and keep your spending within desired limits. This makes it important to track your spending. You can download financial management apps which can give you a clear idea of how much you are spending from each of your credit cards.

Credit utilisation ratio shows the percentage of total credit that you are currently using. A low credit utilisation ratio is good for your credit score. That is why you should try to keep your utilisation ratio below 30%.

To make it easy to repay all credit card dues, you can set up automatic payments on your bank account. It can eliminate the hassle of tracking payment due dates on all your credit cards.

To conclude, having multiple credit cards is a great option if you know how to use them well. By following the tips provided above, you can streamline your financial journey, enjoy benefits and avoid the penalties many suffer due to poor management of credit cards.