Credit cards are a necessity in today’s world. A credit card portfolio helps in providing access to credit when needed and limits fraud risk. This credit card portfolio also needs to be recalibrated and will help the users in replacing cards that are not performing at par with the requirement of the customer.
When the credit card apply process is initiated, the strategies to optimize the credit card portfolio should also be understood so that no financial loss to the user occurs at a later stage.
The credit card optimization process has the following essential steps:
1. Determine the Credit Card user one is
This thought process on what kind of credit card use a person is should be worked out when thecredit card applyprocess is started. The users who apply for credit cards fall under three different categories. Some pay off their credit card debts every month, others maintain a balance always while the last lot does not care about maintaining balance every month. People who always pay their credit card balance every month aspire for a reward card. Others aspire for a low-interest credit card option. Those who fall in the middle of both these options, such people seek both kinds of rewards. Think religiously when the credit card applyprocess is initiated so that portfolio optimization gets easy at a later stage.
2. Comparison of the Market
After the initial hiccups on type of credit card are cleared, the credit card apply process gets streamlined and the user should scan the market on different kinds of credit cards that are available. If the balance is to be paid every month, reward credit cards could be the best option. The interest rates will not affect the users in this case. The intent of the user here should be to find a credit card that maximizes the rewards of the user.
For those who maintain a balance, the credit card applyprocess should be worked in such a manner that the users get a low-interest credit card. Two kinds of consideration are applicable here. In case balance has been maintained, a balance transfer card has a 0% rate for a longer period and low balance fee should be preferred.
In cases when the balance is to be carried in the future, credit cards with low interest should be preferred. These low rate credit cards should have no annual fee and low fixed interest rate that does not fluctuate over time. Choosing wisely at the time of initiation ofcredit card applyprocess will always make this task easy for the users.
3. Adding New Credit Cards
As this research work is over, it is time to apply for a card that can optimize the credit card usage. As a user, one should not apply for multiple cards at one go. This will have a damaging effect on the credit score. If needed, more credit cards can be added over time. There is absolutely no limit to the number of credit cards a user can apply over time. This limit applies only to the number of cards that can be applied in a short period.
Choose credit cards wisely for better financial management. Source: Financial Express
4. Clean your Wallet
As the credit cards that are needed have been added, it is time that the unnecessary cards are surrendered. As a first priority case, the user should get rid of cards that come with an annual fee and do not offer optimal value to the user. The user should not worry about the impact closing of account and blocking of unnecessary cards has on the credit score. This temporary dent will not affect as a new card will replace the existing one. The user should not bother about the phone calls from the credit card company on blockage of cards as the priority has to be decided always by the customer and the optimization process will not be hindered in any way.
However, the user should not purge these cards as a one time exercise. The addition and purging of these credit cards should be done on a regular basis. The market is full of options and credit card offers are abound in the market. Be loyal to the credit card company but keep the priorities clear. It will definitely help in the long run.
5. Analyze the Market
Analysis of the market should also be done when it comes to optimizing the credit card portfolio. The spending habits and rewards that are applicable on the card should also be on the mind of the user when they apply for a credit card. The fine prints and transfer fees if applicable should be understood.
Intelligent planning and creative thinking will help the user in picking up the best possible credit card and the optimization will get easier in the natural course.
