That is the reason why keeping balances far from the credit limit is so important. You never know what may happen and you certainly don’t want to overpay or ruin your credit. Dividing payments with multiple credit cards can help you keep balances away from the credit limit.
This solution, however has its pros and cons. It makes no sense to divide payments on all purchases but there are certain situations in which it is a good idea to keep debt balances on your multiple credit cards rather than concentrating it on a particular one. Let us analyze which are the best scenarios for dividing payments and when it is advisable to use a particular credit card.
Dividing Payments for Big Purchases
Almost all credit cards have credit limits that you need to respect and that you cannot exceed. If you do, you may have to pay penalty fees or higher interest rates and your credit account may get blocked by the issuer. Thus, it is not only important not to exceed the credit limit but also it is important to keep the balance away from the limit if possible. So, when you have to make a big purchase like an important house appliance, it is advisable not to use a single card.
If by purchasing something with your credit card the credit limit would be reached or you will end up close to it, you can always request the salesmen to divide the purchase price between two or more credit cards. That way neither of the credit limits would be affected or exceeded and you can have enough credit left on both cards for an eventual emergency.
What If A Particular Credit Card Charges a Lower Interest Rate
In this particular case it may be advisable to purchase whatever you need with that credit card. However, if the credit limit is exceeded you may be charged a higher rate and thus, you can end up paying even more than if you had divided the purchase price with two credit cards or more. Thus, if there is a risk of exceeding the credit limit, then, even if the rate is temptingly low, we suggest dividing the purchase payment with two credit cards.
Otherwise, you should pay as much as possible with the lower rate credit card since the interests charged by credit card issuers tend to be rather high compared to other financial products and thus, by paying with the lower rate card you would be saving a lot of money. Especially if the purchase price of what you are buying is rather high like when you purchase a fridge or a big LCD television or a personal computer. But if the interest rates are equal or similar, don’t think twice and divide the purchase, it can save you a lot of headaches.
Kate Ross is a professional consultant at Speedybadcreditloans.com where she publishes informative financial advice about Bad Credit Loans, Free Goverment Grants and Leasing, among other subjects.