Multiple credit cards = tight rope walk

IF there were 10 commandments that you abided by in your life I'm sure that obvious ones like 'thou shall not lie' and 'love thy neighbour' would definitely feature on the list. But according to me the one that needs to top the list is 'thou shall never have multiple credit cards'.

Certified Financial Planner, Veena Malgonkar rightly points out cards are an expensive form of credit and its risky to own too many.

Nobody denies that credit cards are a good thing; what with the convenience they offer. But didn't you know that too much of a good thing can be bad?

But how much is too much? "One should definitely have more than one credit card. Of course, not five or 10, but three is a good number," says Puneet Chaddha, Head, credit cards, HSBC. "First, you can compare their services. Second, you get more usage offers. With a higher credit limit and all cards put together, your risk exposure is lower."

Some also find that it helps to classify credit cards for separate uses/people, for example one for the wife, one for online transactions, one for company expenses, fuel card, cash-back card for home purchases etc.

If you just cannot live without multiple pieces of plastic in your wallet, lets see how you can squeeze out the maximum benefit every time you transact.

Check out your billing cycle
First thing to do is pay attention to the billing cycle of each card. If the billing cycle is from 15th to the 14th of next month, you can easily make a purchase on one card, and move on to another for the second purchase. It's the cut-off date on your bill that's important, and you could time your purchases on that basis. This way, with some smart timing you get a credit of around 46 to 50 days depending on which card you are using.

Check out your interest rate
Each person can have a different rate based on their individual credit history and other factors. Find out what's yours. You have the option of negotiating with the credit card company for better interest rates. If you have been their loyal customer for a long time you could easily get attractive interest rates.
Buy consumer durables
If you've been eyeing that new double door fridge then go for it! Only make sure you strike the right bargain. You could have the interest rates waived off and you could even be allowed to pay up the amount in question through convenient EMIs. If you have had a good credit history, you can demand more benefits.

But you have got to be a superman (or superwoman) with a great deal of attention to detail since verifying so many card statements each month, juggling billing cycle dates, negotiating and most importantly, not falling victim to temptation, is like walking a tightrope 24X7.

And if you fall? Remember that interest rates are sky-high (around 36% per annum) not to mention late fees and other hidden charges. So to stay on the straight and narrow not only do you need enormous self control but you also cannot afford to let your eye off the ball even for a single day.

So you see, the result of breaking the multiple credit card commandment is that another ten set of commandments spring up that you simply can't break. Now isn't it easier to just follow the first commandment and stick to one credit card?

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