Which is the best way to streamline one's credit card usage?

Courtesy: Centre for Investment Education and Learning (CIEL)

Nikhil has to first deal with the question of whether he needs multiple credit cards and, if so, how many. Having more than one card is useful when a large payment has to be made or when a particular card cannot be used.

Ideally, the cards should have different affiliations, such as MasterCard and Visa. It is also a good idea for Nikhil to dedicate one card for official use, so that there is no confusion while claiming reimbursement for payments.

Since his job involves a lot of travelling, using a co-branded card that is linked to an airline will help him in official use as he can get credit for usage. Two cards for personal use and one for work-related expenses should be enough for his needs.

While reducing the number of cards, Nikhil should consider retaining older cards with a good credit history since they are likely to have a positive impact on his credit score. The other factors he needs to consider include the acceptance of the card, authorised limits, billing cycles and costs associated.

The cards that he should first consider closing are those that are linked to stores or products since they add very little value and may even encourage spending.

Nikhil should also set up an online payment process for his card, so that he is able to pay his bills from his bank account using the Internet or mobile banking services. Several online services enable paying bills on time, which Nikhil should make use of. He should set in place a system to keep track of the expenses charged, the payment and dates of payments.

Having a place to keep credit card slips will make it easy to access them for checking against card statements. He should sign up for online/mobile reminders of due dates, online statements and payment facility. These are things that Nikhil can do to continue enjoying credit facilities in an efficient manner.