Do I have too many credit cards?

[Anonymous]

I have earned so many points in the last few months from a diverse selection of CCs. I choose one or two CCs to use each month. I pay them in full and then choose another two for the next month. That way, I can easily keep track of my spending, take advantage of all rewards and use all my cards on a cycle.

If you have an organized way of using your cards that works (no accidental missed payments), then you do not have too many CCs.

[sunshine7157]

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@ztnjpv wrote:

It's all a matter of Average of Age of Accounts. 

Look at your average age listed on your credit report and then take all the cards that are younger than that average. Any stick out that are useless or expensive to keep? Get rid of them. Start with the youngest and work backwards. As each younger card comes off, your average account age will go up....and so will your score. 

That being said, useful cards that you want to keep that happen to be younger, should stay....obviously. 

Do some math. Convert all your cards into months and do the ol' add up and divide with various scenarios to see what works for you.

**PS: I just removed a useless AU account from my report that my wife put me on. The card was opened in 2/12. At the time, I didn't mind becauee my scores were suffering. But now that I got rid of my baddies, I realized what a drag it was on my AAofA. I just came off all 3 in the last 2 days and my scores shot up cosniderably

TU 754--->789, EQ 764--->777. I'll see the effect on my EX in a few weeks when PSECU comes out. It was 755. I'm expecting to be in the 770s.  

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Really? I thought AAOA was calculated using both open & closed lines of credit?

[OhioCPA]

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@ztnjpv wrote:

It's all a matter of Average of Age of Accounts. 

Look at your average age listed on your credit report and then take all the cards that are younger than that average. Any stick out that are useless or expensive to keep? Get rid of them. Start with the youngest and work backwards. As each younger card comes off, your average account age will go up....and so will your score. 

That being said, useful cards that you want to keep that happen to be younger, should stay....obviously. 

Do some math. Convert all your cards into months and do the ol' add up and divide with various scenarios to see what works for you.

**PS: I just removed a useless AU account from my report that my wife put me on. The card was opened in 2/12. At the time, I didn't mind becauee my scores were suffering. But now that I got rid of my baddies, I realized what a drag it was on my AAofA. I just came off all 3 in the last 2 days and my scores shot up cosniderably

TU 754--->789, EQ 764--->777. I'll see the effect on my EX in a few weeks when PSECU comes out. It was 755. I'm expecting to be in the 770s.  

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This is a little misleading. AAoA is impacted by both open and closed accounts. Thus, simply by closing "younger" accounts someone's AAoA won't increase per se. It takes the closed account falling off of the report to impact AAoA. Most closed accounts will stay for ten years after the date they are closed. By the time an account gets to that point it is likely helping not hurting AAoA.

On the other hand, having yourself removed as AU on an account that is younger than your AAoA will increase AAoA once the account is removed from your credit file.

[Anonymous]

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@sunshine7157 wrote:

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@ztnjpv wrote:

It's all a matter of Average of Age of Accounts. 

Look at your average age listed on your credit report and then take all the cards that are younger than that average. Any stick out that are useless or expensive to keep? Get rid of them. Start with the youngest and work backwards. As each younger card comes off, your average account age will go up....and so will your score. 

That being said, useful cards that you want to keep that happen to be younger, should stay....obviously. 

Do some math. Convert all your cards into months and do the ol' add up and divide with various scenarios to see what works for you.

**PS: I just removed a useless AU account from my report that my wife put me on. The card was opened in 2/12. At the time, I didn't mind becauee my scores were suffering. But now that I got rid of my baddies, I realized what a drag it was on my AAofA. I just came off all 3 in the last 2 days and my scores shot up cosniderably

TU 754--->789, EQ 764--->777. I'll see the effect on my EX in a few weeks when PSECU comes out. It was 755. I'm expecting to be in the 770s.  

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Really? I thought AAOA was calculated using both open & closed lines of credit?

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All tradelines are factured in the FICO algorithm. 

[Obt3wKLq5t]

I generally keep a card for a purpose so if it doesn't serve a purpose, I'll get rid of them.  The ones that I don't use daily gets thrown in drawer until I need it(i.e. Hilton, Macy, Dell, Best Buy, Kohls, etc).  Having an arsenal of cards help saves me money.  Like the 5% furnishing in Q1 of this year for Citi Dividend card.  That saves me over $200 in one purchase.

	Years
Amex SPG	12.92	I only pay this fee
Amex Hilton	12.92	for history, authorized user
Amex Costco	12.83	Costco
Discover	9.08	rotating bonus
Macy	7.58	Macy's discount
Dell	7.08	Dell's discount
Citi Div World Elite	6.75	rotating bonus
Best Buy	4.58	thinking about closing
Citi Forward	4.00	Amazon, Restaurant
Pentagon Cash Rewards	3.17	Gas
Citi AA Visa	1.83	Gone in 7/12
Kohls	1.58	Kohls' discounts
Chase Freedom	0.33	rotating bonus
Pentagon Rewards	0.33	Grocery
Chase Marriott	0.08	Gone next year
Chase United	0.08	Gone next year

[ztnjpv]

Really? I thought AAOA was calculated using both open & closed lines of credit?

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Either way, it's still true and the advice still stands.

Add up all your open and closed accounts. The math still works. This advice is better and more effective if you don't have a lot of older accounts or if you have a lot of newer accounts that you don't use and are looking for a boost. However, in the long run, you'll have fewer older accounts as those accounts age to offset newer accounts. Everyone's situation is different. 

[ztnjpv]

This is a little misleading. AAoA is impacted by both open and closed accounts. Thus, simply by closing "younger" accounts someone's AAoA won't increase per se. It takes the closed account falling off of the report to impact AAoA. Most closed accounts will stay for ten years after the date they are closed. By the time an account gets to that point it is likely helping not hurting AAoA.

On the other hand, having yourself removed as AU on an account that is younger than your AAoA will increase AAoA once the account is removed from your credit file.

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Not really. It's only misleading if you take more from what I am saying than is really there....or less. And yes, closing young accounts WILL increase your average account age. It's simple math. What's not clear depending on individual circumstances is how significant that effect will be or if it's a wise move. For someone with a lot of older accounts both open and closed, the effect of one young account closing is minimal. But for someone with a lot of newer credit and a lot of older accounts, the effect will be stronger. The scenarios and best courses of action are almost limitless.

[sunshine7157]

I have to agree with OhioCPA on this one, but we'll see. I have a history of 15+ years, AAOA of 6 yrs as a result of opening new credit cards within the past 12 months. I have closed one of those this last week and it will report as closed within days now. I will report back as to whether my AAOA changed as a result.

[ztnjpv]

Consider the chart above by Obt3wKLq5t.

Notice the average account age. Without doing any math, it's clear to see that the 3 cards marked for closure will boost the average account age once they are gone. But notice the even younger cards that will not be closed. Obviously AAofA is not all that matters. Useful cards are useful cards no matter how young or old. But the cards at the stop are not going to be closed whether they are used or not and that's smart. Just imagine the revised average age of accounts if one of those 13 year old cards were to be removed. Obviously, the effect would be soften when the age of closed accounts is factored in as well but the effect would still be there.

[OhioCPA]

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@ztnjpv wrote:

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Not really. It's only misleading if you take more from what I am saying than is really there....or less. And yes, closing young accounts WILL increase your average account age. It's simple math. What's not clear depending on individual circumstances is how significant that effect will be or it's a wise move. For someone with a lot of older accounts both open and closed, the effect of one young account closing is minimal. But for someone with a lot of newer credit and a lot of older accounts, the effect will be stronger. The scenarios and best courses of action are almost limitless.

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The numerator and denominator don't change when an account is closed.

Once an account is opened the damage to AAoA is done. Only the aging of the accounts will repair AAoA.