Whether you make your card payment in full or just pay the minimum required amount, you only make one payment every month to your credit card issuer. It does not matter how much you choose to pay or how many cards you own, as long as you pay the minimum amount on time. However, to improve your credit score, it is better to make multiple payments over the same billing cycle. The impact that multiple payments will make on your credit score is a lot more than just making one payment every month.
A large portion of your credit score is based on the ratio of your card balance to the credit limit or in other words – credit utilisation. To improve your credit score, this ratio needs to be as low as possible.
The balance updates on your cards are normally sent to the credit bureau on the last day of the billing period. The bureau calculates your credit score based on the payments made. For instance, if the balance amount remaining on your card is S$1,000 at the end of the billing cycle for a card that has a credit limit of S$2,000, your credit utilisation will be at 50%.
The balance that is reported to the bureau can be controlled if you make card payments regularly. This means that a major chunk of the balance should be paid off at the end of the billing cycle. This will reduce your credit utilisation and help improve your credit score.
If you spend big, it will be very helpful to have more than one card and pay off as much as possible on each card at the end of every month. Another way to improve your credit score is by spreading your payments between paychecks. This will help you keep your bank account level during the course of the month against dropping a large amount on your card balance all at once.
Let us now take a detailed look at how you can make repayments for multiple credit cards:
When you have to choose which card you must clear dues on first, choose the one with the highest rate of interest. By doing so you can pay the entire sum on that card first, then take up the others. You can also choose to pay a bigger amount on the card with the minimum debt and pay the entire sum on that first, then go on to the subsequent debt.
At the end of every month, try to pay off as much as possible to reduce the interest that you will have to pay. Pay at least the minimum cyclic repayment amount to avoid paying default fees. The card statement that you get at the end of each month will give you the data about the time it will take to pay off the whole balance by making minimum repayments.
If you own more than one card, choose just one of them for online payments and emergencies. Lower the credit utilisation on this particular card to a sum that you are sure you will be able to repay within a few months.
As you pay off all your debts on each card one by one, close them without any delay by getting in touch with your issuer. If you do not shut the account properly, you may still be charged with some fee, even after you have stopped using the card. At the same time, mind that closing card accounts back to back may impact your credit score. This will be seen as extreme caution on your part.
Although, transferring your debts from one card to another is not the same as repaying, over the long term you can save a lot of money if you pay back all the previous amount owed. And you pay it at a much lesser interest rate, including costs. It is an ideal way by which you can avoid your credit score from going down especially if you own multiple credit cards.
To get maximum benefit out of a balance transfer card, you must pay the entire remaining sum before the end of the transfer period. To avoid setbacks, do not forget to check the interest rate that will apply to you under the following two circumstances:
If you are struggling to get any control over your debts, you must take corrective action quickly. Putting it off for some other time will only make it more difficult for you to obtain credit in the future. To get more clarity on how to maintain and repay your debts from multiple credit cards, get in touch with your bank/lender immediately.
You may get the opportunity to come to an agreement on a repayment plan until a short-term financial condition is resolved or until you pay off your debts. There are also many financial counsellors in Singapore who offer free advice and help you tackle your debts.
Failure to handle debts from several credit cards can lead to more tension. Try to avoid having more than two cards, and ensure that you can easily pay off the credit limit. Following the steps mentioned above will help you manage your card debts intelligently and successfully. Prioritising multiple credit card repayments will also help in maintaining and improving your credit score.