How to Switch Between Credit Cards for Maximum Rewards

Regular as well as online Credit Cards offer a multitude of benefits, from cashback and travel points to exclusive perks. Strategic switching between different cards can be a valuable approach to fully taking advantage of these benefits and maximising your earnings. 

This guide will explore the key factors to consider, the advantages of switching and effective strategies to optimise your rewards. 

Common Credit Card benefits

1. Travel rewards – You can earn miles with specific airline cards or travel points with flexible cards that offer flight, hotel and car rental benefits. 
2. Cash back – You can get cash back on everyday purchases. Some cards offer high benefits for groceries and gas, while others give cash back on both purchases and payments. 
3. Introductory rates – On purchase of a new card, you may enjoy 0% interest for a limited time on purchases and/or during balance transfers. 
4. Discounts and gift cards – You may also enjoy savings at specific stores, whereas, some may offer welcome bonuses like gift cards.
5. Insurance – Certain instant Credit Card provide rental car insurance if you use their card to book and decline the rental company’s coverage. 

How to switch between Credit Cards to optimise benefits

Managing multiple Credit Cards effectively can help you optimise benefits and avoid financial pitfalls. Here is how you can do it:  

• Extend your interest-free period

Credit cards offer an interest-free period, typically ranging from 20 to 50 days. By using two or more cards with different credit card bill payment cycles, you can maximize this window. Additionally, utilizing a credit card EMI calculator can help you plan your payments more effectively, ensuring you make the most of the interest-free period. 

For example, if the billing cycle for card A ends on the 16th, use it for purchases after the 16th. For expenses earlier in the month, use card B, whose cycle ends at the end of the month. This way, you can enjoy longer interest-free periods and manage your cash flow better. 

• Maximise deals, discounts and cashback

Different cards offer unique rewards, as discussed earlier. Track your spending habits and choose the card that aligns with your needs. 

For instance, if you frequently order food through apps, use a Credit Card offering discounts on food delivery. This approach ensures you do not miss out on exclusive deals while getting more value for your purchases. 

• Boost your credit score with a higher credit limit

Each new card increases your overall credit limit, which can positively affect your credit score. A lower credit utilisation ratio boosts your score. 

For example, spending ₹40,000 on a Credit Card with a ₹2 Lakh limit results in a 20% utilisation rate. Adding another card with a ₹1 Lakh limit lowers your utilisation rate to around 13%, improving your credit score over time. 

• Use balance transfers to manage debt

If you are unable to make Credit Card bill payments on time, you can use a balance transfer to shift your debt to another card with a lower interest rate. This gives you extra time to pay the balance while avoiding late fees. However, balance transfers often come with processing fees, so use this option wisely. 

• Ensure backup for transactions

Having multiple cards provides a backup in case of technical issues, like a declined card at a point-of-sale machine. This is especially important for frequent travellers or in situations where carrying cash is not ideal.  

Summing it up

Strategically switching between Credit Cards can significantly enhance your rewards and benefits. By understanding the various card benefits, managing multiple cards effectively and utilising balance transfer wisely, you can make informed decisions to optimise your financial gains.

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