What is the purpose for that many cards?

[pipeguy]

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@Anonymous wrote:

I've read that article a few times. I still don't understand how 100k of available credit is necessary. But as you said, to each his own. I will search through the threads to check out more feedback on it. Thx

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Here's an example, I'm currently dealing with an estate as the administrator (executor), welp there are a lot of expenses having to do with an estate - especially one that is cash poor and asset rich which is my situation. I have a card with a $20k limit which does not report to the CRA's, currrently I'm using the better part of that credit line for estate purposes which will be paid back by the estate later this summer, but for now "available credit" is a big help because I don't have to go apply for a bridge loan for the estate which would probably be in my name and ding my credit scores as a new account and for inquiries. I can also max out this account (per se) in the short term without dinging my other scores because I have the option to use existing open accounts, especially one that does not report.

Now you might say, how many times will I need to deal with an estate - hopefully not many, but major car repairs when you break down in jackass flats or a broken arm while traveling in Europe or anywhere overseas, or your water heater blows out ..... any number of reasons. Lots of cards and lots of "reserve credit" is just that, when you need it you don't have to go hat in hand to "Joe's Payday Loans" to take care of matters - it's NOT for showing up drunk at Bestbuy and picking up a 84 inch 4D new TV because it seemed like a good idea at the time.

[happypill]

There are a lot of reasons:

1. As others have mentioned higher overall limit to reduce utilization%

2. Growth/buffer for AAoA - if you have 1 account and you add one, you just cut your AAoA in half; if you have 20 accounts you only cut it by 5%.

3. Diversity of lenders - lenders sometimes do unexplainable things.  They cut limits, close accounts, put fraud alerts on your cards, etc.  Some of it is warranted, but sometimes its nice just to be able to walk away from a lender, and you can do that if you have lots of other accounts.

4. Points, sign-on rewards, annual bonuses - I think most people don't put more than 2-4 accounts into regular usage, but many people like to accumulate points and sign-on bonuses are a great way to do that.  There are also certain cards (most common with hotel cards I believe), where the annual reward exceeds the annual fee.  If you can get $500 worth of free hotel stays for a $50 annual fee, it makes sense to keep that card, and any others like it.

[onstar]

But you (OP) do have a point.

While all these reasons that people are providing in this thread can be valid, they are often not the reasons why some people get "that many cards" in their wallet. For many, this has become a game. It's about want, not need. I am definitely guilty of this too. It's financial immaturity. America has a spending problem.

NOTE: Some of you might not like this post because YOU don't play the credit card game or YOU are really responsible. Then clearly, this post is not about you. This is directed more at the people who don't have a handle on their finances (which is roughtly 1/2 of all U.S. households).

[Anonymous]

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@onstar wrote:

But you (OP) do have a point.

While all these reasons that people are providing in this thread can be valid, they are often not the reasons why some people get "that many cards" in their wallet. For many, this has become a game. It's about want, not need. I am definitely guilty of this too. It's financial immaturity. America has a spending problem.

NOTE: Some of you might not like this post because YOU don't play the credit card game or YOU are really responsible. Then clearly, this post is not about you. This is directed more at the people who don't have a handle on their finances (which is roughtly 1/2 of all U.S. households).

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Why on Earth do you think having a lot of cards and financial maturity are mutually exclusive? Simply having the cards isn't a problem, it's what you do with them, same as any other tool. 

You're right in that personally I do see it as a game, I did a 10 card app spree at the beginning of February because I was bored and it was fun. I had more than enough in my CLs to get into trouble before the spree and obviously after it too. I also pay my bills off every month and haven't had to pay interest on a card for the last two years.

If my wife ever thought for a second that I would be running them up I would hear about it, long and loud. I got the arched eyebrow several times as it was. CPAs can be like that.....

[PinkPanther3719]

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@onstar wrote:

But you (OP) do have a point.

While all these reasons that people are providing in this thread can be valid, they are often not the reasons why some people get "that many cards" in their wallet. For many, this has become a game. It's about want, not need. I am definitely guilty of this too. It's financial immaturity. America has a spending problem.

NOTE: Some of you might not like this post because YOU don't play the credit card game or YOU are really responsible. Then clearly, this post is not about you. This is directed more at the people who don't have a handle on their finances (which is roughtly 1/2 of all U.S. households).

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I completely agree. I did credit applications a couple of weeks ago just to see which cards I could get. Yes, there were some I truly wanted, but some I apped for just because I knew I could probably get it. Currently only 6 of my accounts have a balance. One is because I'm using it frequently because I want a higher credit limit and I just established a relationship with the company. Two I am using for balance transfers as one is 15mon 0% apr and the other is 12 mon 0%apr. I have a Care Credit account as I had a cat that got very sick and passed after surgery. Two have very small balances just so they won't get closed (will be paid when they post).

I'm putting the money I'm saving from the 0% apr in a savings until the last month of the promotion and just paying it all off. I'm making more than the minimum, but don't want to pay it off when I can save some. What's I'm planning on doing is writing out all my cards and their benefits and using the one that gives me the best benefits as my regular card.

For a while, I always used my debit card as I didn't want to get in trouble with my credit. Then I realized, I might as well use the card and pay it back immediately. That way, I'm getting benefits (generally cash back) and it's as if it still came out my account.

[dollar_bill]

If you are responsible there is a lot of upside to having a good number of cards. I'm not sure I agree with the financial immaturity comment I read from someone else, rather it's the opposite. To maintain a higher count profile takes an extremely mature individual. It's easy to get credit and burn folks, it's much harder to get credit and grow your file as the years tick away. That takes a responsible, mature person.

It was mentioned in a bunch of other posts, but there is a huge upside with sign-up bonuses, reward points, AAoA, etc... The utilization part is really helpful if you ever find yourself in a temporary cash shortage. It's happened to me before and it could happen again.