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Nowadays, many people prefer to have multiple credit cards because they increase their credit limit. Having a higher limit means they can shop and spend more. Some even believe that having multiple cards will benefit from various offers, cashbacks, and reward points.

The problem begins when these cards cause your CIBIL score to plummet. Factors like card due dates (Due Date Miss), high utilization (High Utilization), annual fees (Annual Fees Pressure), and the Minimum Due Trap) can all impact your overall credit profile. Therefore, it's crucial to understand these five things.

1- Remember the due date: One mistake can impact your CIBIL score.

Having multiple credit cards means higher bills and longer due dates. If even a single payment due date is missed, the bank will charge a late fee, and your CIBIL score will drop. Credit bureaus view every missed payment as a negative mark. Therefore, it's best to note the due dates of all cards together and set up auto-payments.

2- Pay Attention to Credit Utilization Ratio
Credit Utilization Ratio is considered the most important factor in your overall credit score. Always try not to spend more than 30% of your total limit. Having multiple cards makes it difficult to track each card's limit, and sometimes spending above 30% can cause your score to drop.

3- Don't Underestimate Annual Fees
Many premium cards (Annual Fee Credit Cards) have hefty annual fees. If you have 5-6 cards, their annual charges alone can cost thousands of rupees. If you're not using a card at all, consider closing it. Remember, having a credit card is only beneficial if it's used for your needs.

4- Don't Get Sick of Minimum Due Amount
The minimum due amount on a credit card is provided to prevent the customer from being marked as default. However, if you only pay the minimum due amount, your interest charges will continue to increase, leaving you with a significant amount. Always pay the full bill to avoid interest charges and protect your score.

5- Use Reward Points Timely
If you have multiple cards, it can be difficult to keep track of reward points on different cards. Many cards expire after a certain period of time. Therefore, keep track of your points, note the expiration date, and redeem them regularly to avoid missing out on benefits.

Conclusion
Having multiple credit cards isn't wrong, but managing them properly is every user's responsibility. Even a small mistake can damage your CIBIL score. If you manage your due dates, limits, annual fees, and rewards correctly, credit cards can prove to be a powerful financial tool.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.