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Credit – cards, banks, merchants lenders all seem to give you one. But when should you get it and how many should you have?

Having a credit card is easy to access to money, you don’t need to carry cash to buy anything. It is also a form of unsecured credit, which simply means you don’t have to necessarily pledge anything you own to avail this credit, unlike a home in case of home loan. But as with anything related to your hard earned money, credit cards and its usage requires forethought. Hopefully, to not treat them like ‘Magic Cards’ as called by the Rebecca Bloomwood the title character of the popular movie, Confessions of a Shopaholic.

As a working woman, let me share my ride with credit cards. I have two credit cards. I am 36, based in Mumbai, I am a content writer and a corporate investigator. My income is not monthly. One of these credit card accounts I acquired when I earned a monthly salary as a journalist but the other one was opened when I started working on a freelance or consultancy basis.

Why am I giving you these details? To give a background about how I got those two credit cards. Credit cards granting is a process that considers two aspects: your income and your repayment behaviour. When my first credit card account started more than a decade ago, I had a very low credit limit. It grew along with my income, spending and repayment track record.

How many cards for me?

Well, there is no perfect answer to how many credit card one needs? My sister has no credit cards. She hates the concept. She has debit cards, which she uses. She is more of a cash person, doesn’t believe much in the electronic mode of payments. In the recent past, she has started using a UPI payment app.

While she is on one end of the spectrum, I have a friend who has about 15 credit cards, uses about 10 of them regularly, he is very efficient at keeping track of payments, has never forgotten a deadline to pay up.

Wonder why he has so many cards? He has mostly co-branded credit cards, in simpler terms a credit card company teams up with another brand to offer it to customers some benefits which may range from earning rewards points to some freebies. These are offered based on your spends against your credit card account. My friend just has these co-branded credit cards, to be able to earn them. I have known him to get free air tickets with accumulated reward points and every now and then earns one free movie ticket as well.

Understanding your own temperament

If there is any basis for you to decide how many cards you would need, it should be about how you manage your spending and repayment. I am a person who finds it difficult to keep track of credit card payments. While I do love freebies, I hate it when I forget to pay on time. I don’t want trade attributes in my credit score as it may pull it down. So I do have a co-branded credit card account which I opened recently, it is associated with an airline. The rewards can give me free airline tickets.

The other card I have is a regular credit card, this is my first one. It does have its own loyalty programme, but the rewards are almost negligible or none. But I still use this card, because this was my first credit card account. The credit limit grew with my earnings and repayment, has a long history, an important aspect a lender looks at while granting a loan.

Now based on your lifestyle (whether you want to earn rewards for flight tickets or movie tickets or even grocery) and your ability to remember to keep track of payments, you can take a call on how many you need. There are also many apps that can track your expenditure of credit cards, but verifying that you have been billed right is something that you would have to do personally.

A seemingly attractive option that credit cards offer is to pay your credit card bill in instalments. But this would also mean that you would pay an ‘x’ amount of interest to your credit card company per instalment for this convenience. Even if you consider the interest amount low, it goes essentially against the basic tenet of good money management – ‘save first, spend later’. Sure, make use of an online discount sale to buy something that you need. But it’s better to save up through investments and plan your purchases rather than giving in to your impulses.

Impact on your credit score

Credit card is also one of the most useful forms of credit that give you much-needed data on building your credit history to calculate your credit score. The flip side is it is on record that can impact the score adversly as well.

Managing credit cards payment is really an important task. Delayed and defaulted payments may impact your credit score adversely, thereby affecting your creditworthiness.

While my friend who has about 15 credit cards has opted for automated payment requests with his banks, I am not comfortable with that process. I would like to go through my bills in detail to make sure that I am not billed incorrectly, and pay my bills on my own before the due date.

You have an option to automate your payments. However, you choose to pay, make sure your payments are made on time and not delayed. That said, your credit score is not written in stone, it is dynamic. It doesn’t harm to keep your repayment track records clean. When once you start earning and you get a credit card, it helps you to start building your credit score.

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