With an array of expenses to be handled every month, keeping multiple cards is common among urban citizens.While on one hand it increases your hassles to keep track of how much you are spending, on the other it improves the credit utilisation ratio, thereby increasing your credit scores and worthiness for acquiring loans.
Credit Utilisation Ration
Credit Utilisation Ratio is the percentage of the available credit limit you are utilising. If you have a spending limit of Rs 100,000 on your credit card, and say you use Rs 70,000 from that limit in a month, your CUR is 70%. This ratio reveals how much of your available credit is used every month.However, too much use of credit card, even if it is within your limit, might make you appear like a credit-hungry person to a bank or an NBFC looking at your credit history.
Another reason for having multiple credit cards is to avail the maximum available rewards on every purchase you make with a credit card. However, one should avoid going overboard. If you have too many account, it is easy to to forget bill payment or even loose a card. Consequences for non-payment or late payment can be multi-fold - late fees along with extremely high interest on the the default. The problems that can result from such an oversight will quickly ruin any savings you might have earned.
The Bottom Line
There are many benefits to having multiple credit cards, but only if you manage them correctly. To ensure that having several credit card accounts will work for you, not against you, be aware of the benefits each card offers, your credit limit on each one and your payment due dates. Use each card to your best advantage, and make sure to keep your balances low and pay them off in full and on time.