05-12-2008 05:25 PM
05-12-2008 05:52 PM
05-12-2008 08:27 PM
06-12-2008 04:14 PM
08-26-2008 01:11 PM
10-15-2008 08:48 AM
I agree, it doesn't matter as much how many cards you have, but how you use them. I have collected way too much debt, but am in the process of paying it down. I have many cards that I no longer use because of high interest rates. I currently use 5 cards. One monster (highest rate) holding debt that I am trying to pay off ASAP, another with debt at a better rate but pretty full, two cards that have reward programs that I use for small bills and purchases that I try to pay off each month and one that has "for the life of the loan" very low interest balance transfers (but a high under lying rate) which I keep pretty full but never risk going over my limit (its virtually all low rate balance transfers).
I am also now trying to save for the big bills like car insurance in which you can save big money by paying in full for six months (and taking advantage of the month with an extra pay day).
Despite having too much debt for my income, I have never been late, never missed a payment and my credit score is pretty good.
Just a warning about balance transfers, there often is a 3% transaction fee that you need to calculate into your decision. Also very important is the interest rate of the card in general especially if you have debt on the card. While you are paying off your balance transfer the higher rate debt on the card will continue to grow. Also if you don't pay off the balance transfer before the rate expires, whatever is remaining will go to the higher standard rate.
Finally, relying on "stealing from Peter to pay Paul" is an easy way to get yourself into deeper debt. You should try to only use balance transfers that maintain a lower interest rate for a long time and only to reduce the interest rate on your debt.
Note: Because of sometimes lax or mistimed reporting one credit card can show a balance transfer (or other transaction) as already happened and another not, so it can make you have more debt than you actually have.
10-15-2008 01:30 PM - edited 10-15-2008 01:31 PM
10-15-2008 02:43 PM
If 4-5 or more credit cards is optimal, why did my score drop when opened one? I currently just have received a third one
New Accounts Gain Points for 2 reasons:
1) It reduces your utility (if your utility is ultra low now then this is not a real help)
2) It increases your credit mix (if you already have 2 revolving cards you are not improving your mix)
New Accounts Gain Points for 3 reasons:
1) New Credit Category takes a small hit (ALWAYS) and the effect lessens over the year
2) Your average age of accounts decreases and you lose points (USUALLY - if the effect is so slight it doesn't change your average number of years it may only delay score increases not cause an immediate drop)
3) An inquiry for requesting the account takes away points (ALWAYS) and the effect stays for a year
10-15-2008 04:48 PM