No longer is it considered thrifty or financially prudent to use a single credit card.
With the wide range of cards available on the market now, your spending power – not to mention your saving and earning power - is considerably restricted if you only have one card.
It makes sound financial sense to have a spread of top quality cards in your wallet covering all your bases, whether it be for emergencies, household shopping, foreign travel, balance transfer purposes or for those occasional big purchases.
And don't forget all those cash-back offers!
Remember these few basic tips
Before deciding how many cards you should have and to ensure you get the best deal, there are some useful points you should remember:
Horses for courses - it is important to match the right card to the right purchase.
Ideally, ensure you avoid having to pay any interest.
The best time to use your credit cards is in the event of low interest or interest-free periods. But if you are doubtful about being able to pay the balance off on time or in full, it is wiser to rather avoid using your credit cards.
If you are the last of the big spenders, or a totally disorganised person, credit cards are definitely not for you and best avoided altogether. You may well find yourself getting into a tangled financial mess and digging yourself out of that hole will be a real nightmare.
Which cards do what?
Everyone should have the following basic basket of cards:
A credit card that give you cash back
This is a most practical and useful card to have in your pack as it can not only be used for grocery and other household shopping but also for paying bills, buying petrol, paying for holidays and more.
But you will need to make sure you pay it off in good time every month to avoid that excessive interest charge for late payment.
If you are sufficiently disciplined about paying up in full each month, the cash-back rewards are excellent and you could score to the tune of several hundred pounds over the year.
A credit card you can use on holiday
You can save a small fortune on your holiday expenses by having the right credit card to avoid those foreign transaction fees.
This card is an absolute must for foreign travel but should be kept only for those summer holidays abroad.
A credit card that doesn't charge a fortune in interest
This card should be kept on hand to be used only when you know that it is impossible to pay off the balance immediately.
It is the ideal card to keep on the back burner for emergencies as it charges a lower rate of interest than others.
A credit card that gives you an interest free period for big purchases
This card comes into its own when you need to make a big purchase that you know you won’t be able to pay off immediately. So you can buy that large household appliance or an expensive birthday present and pay it off over the interest free period, usually a full calendar year.
A credit card you can transfer outstanding debt to
A balance transfer credit card is the most sensible one to use if you have accumulated debt elsewhere as you are able to gradually repay the debt without those devastating interest rates hanging over your head.
But be warned - you do need to be wary of hidden costs such as transfer fees.
It is definitely not advisable to use this card for spending as well, as the interest generally works out much higher than for balance transfers.
You are probably going to have to weigh up whether it would be preferable to use the 0% Balance Transfer card or a Life of Balance Transfer card, which may not be interest free, but usually doesn’t incur a transfer fee and will keep your interest payments lower – and manageable - over a longer period of time.
How to be organised to best advantage
If you are going to use a number of credit cards, you must be as organised as possible or you could end up losing out on all the benefits of owning multi-credit cards.
Some sort of system is highly advisable when you are juggling with a number of cards so that you can ensure that your bills are paid in good time to avoid any accrual of interest.
There are a few simple ways you could use to jog your memory.
Try highlighting the calendar or make use of mobile phone alerts or perhaps fix a regular credit card payment date every month. Whatever method you choose, find the one that works best for you.
And don't allow the interest bogey to catch up with you!
A word or two of warning
Remember that applying for too many cards all at once might hurt your credit rating so rather build up your collection of cards over a period of time.
Also, be careful about applying for a card if you don't comply with the criteria and your credit rating is unsatisfactory. A failed application could impair your credit rating quite substantially.
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