Credit card diversification opinions

[longtimelurker]

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@Credit_In_CT wrote:

I'm curious as to what people feel is more important. Diversification across lenders (Chase, Citi, Barclay's, Amex, etc) in the event of some sort of AA or problem with a particular lender or sticking with one type of rewards program(UR, MR, cashback)? I suppose you could diversify across lenders with cash back but I don't really think you could with rewards programs. Anyways, let me know your thoughts. 

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It somewhat depends on your spending volume as well.    Those with moderate spend (choose your own definition!) wanted to transfer points, are better off choosing one of MR/UR/SPG, rather than spreading it around the different programs, as you then end up with a useless amount of points in each.   Very heavy spends can be in all of them, to maximize opportunities for transfer etc.  (Lower spend is probably best focused on cashback, or psuedo-cash back cards like Arrival/Venture, if the AF can be justified)

But, outside that, has at least one other card not from that issuer, for the diversification reasons given.  If your vendor rightly or wrongly freezes your cards, you want some backup.  And having some network diversification in case of outages is also good.

[Credit_In_CT]

I fall into that category that spends moderately. I have a Platinum Amex and CSP, so I'm accruing both MR and UR points. Trying to decide if I should go with an Amex EDP, Chase Freedom, or something like a Barclay Arrival Plus to use for travel spend that isn't covered by points transferred in one of the other programs. Hopefully that made sense. 

[longtimelurker]

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@Credit_In_CT wrote:

I fall into that category that spends moderately. I have a Platinum Amex and CSP, so I'm accruing both MR and UR points. Trying to decide if I should go with an Amex EDP, Chase Freedom, or something like a Barclay Arrival Plus to use for travel spend that isn't covered by points transferred in one of the other programs. Hopefully that made sense. 

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OK, so the first question would be: Can you use both MR and UR (i.e. are the transfer partners useful to you for both)?  Next would be your goals.   How many UR/MR do you need to get, and how are you doing? If far away, does it make sense to focus spending on just one?  

Unless you can spend more than $40K on the Arrival Plus, it doesn't make sense except for the bonus (under that figure the Fidelity Amex wins).  But for the first year, it can make sense to get it for the bonus.   Any spend you put on it in less spend on UR/MR though!

But if you commit to one program, then yes, get the Freedom or EDP.

[core]

If you only have cards with one or two creditors, they've got you by the (toes) and they know it.  Whereas if your reports are showing many prime creditors you've got at least some leverage because they know it wouldn't hurt you a bit to close your account(s) with one company.

Also consider that your accounts could be closed even if you PIF on time every time.  For a variety of reasons; I won't rehash all the stories here.  If all your accounts are with that one company that would be a very bad day for you.

[longtimelurker]

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@core wrote:

If you only have cards with one or two creditors, they've got you by the (toes) and they know it.  Whereas if your reports are showing many prime creditors you've got at least some leverage because they know it wouldn't hurt you a bit to close your account(s) with one company.

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While somewhat true, I think this is overstating the risks.  Banks don't want to close your accounts for fun, and if they do things you don't like, with a good CR, you can easily apply for cards with other issuers then.   So you really aren't a captive from that viewpoint.

But as already stated, you do want some diversification just in case of a dispute or an error with an issuer, you want to have at least one open card.

[chwebb1]

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@core wrote:

If you only have cards with one or two creditors, they've got you by the (toes) and they know it.  Whereas if your reports are showing many prime creditors you've got at least some leverage because they know it wouldn't hurt you a bit to close your account(s) with one company.

Also consider that your accounts could be closed even if you PIF on time every time.  For a variety of reasons; I won't rehash all the stories here.  If all your accounts are with that one company that would be a very bad day for you.

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+1. The other reason being that if one creditor decides to not resolve an issue with your account. For example, if you have a creditor with a crazy APR that they won't reduce, or you run into issues with a purchase that they won't help resolve, you can just end your relationship with that bank and move on with life. This can also be used for rewards: if a bank nerfs a reward program, just close the account and move onto a different card that you already have. Diversification is a great thing, in both credit and deposits. I personally maintain credit relationships with AMEX, Discover, Citi, Barclays, BoA, and BillMeLater (PayPal). I keep money with CapitalOne 360, Ally, Barclays, State Farm Bank, and DCU. I maintain investment accounts with CapitalOne ShareBuilder and BoA (Merrill Edge). Unfortunately, I do have some overlap between my accounts (Barclays, CapitalOne, and BoA), but it wouldn't be too difficult to move my business elsewhere if one of them decides to be unhelpful about whatever.

[Anonymous]

longtimelurker - my reference was not related to the chip & pin. Where you point that out and explain I follow.

[baller4life]

I am a strong believer in never putting all your eggs in one basket. Diversification across lenders is VERY important. I will never give one creditor that much power over me.