What’s inside:
This article discusses the increasing use of credit cards in India, their impact on CIBIL scores, and tips for managing them wisely.
These days, many people in India use more than one credit card after getting their monthly salary. With the digital economy growing fast, credit cards have become a part of everyday life, not just for shopping or traveling.
It is noted that one in three cardholders have two or more credit cards. While attractive offers, rewards, and cashback tempt users, there is a risk of harming one’s CIBIL score if not managed properly.
Using credit cards wisely is important. For instance, if you have two cards with a limit of Rs 1 lakh each and spend a total of Rs 50,000, your credit utilization will be 25%. A lower utilization rate is seen as a good sign by banks.
Repeated applications for new cards can lower your CIBIL score due to hard inquiries. Missing payments or closing old cards can also hurt your score. It is suggested that a medium-income individual should have 2-3 cards, and travelers may use up to 4 cards, given they pay on time.
To manage credit cards well, spend within the limit and pay bills on time. Avoid closing old cards as they help maintain a strong credit history.
Summary:
- Many Indians now use multiple credit cards.
- One in three cardholders has two or more cards.
- Credit utilization affects trustworthiness with banks.
- Missing payments can damage your CIBIL score.
- 2-4 cards are recommended based on income and usage.
