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Credit cards can be powerful financial tools, but they can also land you in debt if you’re not careful. Avoiding this situation often starts with paying your bills on time, but this can be hard when you have more than one credit card.
Beverly Harzog is one of many Americans who struggled with using her credit cards responsibly, racking up more than $21,000 in debt in her 20s. But after decades of self-discipline, she built up her credit and became a nationally recognized credit expert. Here are some of the lessons she learned about successfully managing multiple credit cards.
1. Determine how much you can spend on each card
Credit cards can be useful, but they can also make it easier to spend money you don’t have. Developing a budget can help you figure out how much money you can charge on each card without running up a balance you can’t pay off. Once you start carrying a balance from month to month, you’ll likely have to start paying interest on it.
2. Keep track of your cards’ terms and limits
Often, owning a credit card isn’t as simple as paying off your balance. Harzog suggests cataloging all your cards’ fees, terms and conditions in a spreadsheet. Keeping track of this information can help you budget better. If you know the interest rate for each card, for example, you can calculate how much it’ll cost you to carry a balance as well as which card it would be cheapest to carry a balance on if you need to.
It can also be useful to note how each card’s rewards program works. Knowing your rewards balance, if the rewards expire, when they expire and how you can use them can help you get the most out of each card. While you can also put this information in a spreadsheet, there are a number of websites that will keep track of your rewards for you, such as AwardWallet and TripIt Pro.
3. Create alerts for due dates or set up automatic payments
Failing to pay your bills on time is a quick way to rack up extra fees and debt, Harzog says, but setting up due date reminders can help you avoid this problem. Credit Karma and many credit card providers offer this service for free via their websites, or you can create alerts manually on your phone or computer. If you’re not a fan of constant email or text alerts, you may be able to set up automatic payments, where your credit card provider will automatically withdraw the amount due from your checking account each month.
4. Pick a due date that works for you
For some people, it’s not the size of their balance that’s the issue, but when they have to pay it. According to Harzog, you can typically fix this problem by calling your credit card providers, who are often willing to change your card’s monthly due date. Picking a date that works best with your cash flow can help you avoid making late payments. And, if you’re able to move all your due dates to the same day, you may have an easier time remembering when to pay your bills, since you don’t have to keep track of several different due dates.
5. Check your credit card activity frequently
The more cards you have, the more opportunities there are for a thief to steal your credit card information. To avoid this, Harzog recommends checking your credit card accounts several times a week and calling your provider if anything looks suspicious, like purchases that neither you nor an authorized user made. Many providers will also send you alerts if they see any activity that’s out of line with your normal spending patterns, Harzog notes. For example, your card issuer might contact you if there’s a purchase that was made in a distant city where you’ve never used your card before.
Managing multiple credit cards may seem like a daunting task, but it doesn’t have to be if you’re careful about how you use them. Setting up a budget, understanding your cards’ terms and limits and finding a payment strategy that works for you can help you get the most out of your cards.