topic Re: What am I missing? in Credit Cards

What am I missing?

Anonymous — Fri, 15 Apr 2016 09:18:39 GMT

I am still very new to the group, started here about a month ago. Let me say that there is a weath of info here and it has already improved my scores about 15+ points in last 30 days. Now, I understand the whole concenpt of available credit and usage but I am having a hard time understanding what the adantage is to lots of credit cards and available credit in the hundreds of thousands? Unless I hit the lottery or find a buried treasure in my backyard, I can see myself spending around $2000 per month on my credit cards and paying them full each month. So if I was able to build my credit to the point of 4 or 5 cards with a total of $80,000 to $100,000 SL, why would I need any more than that? Please understand that I am not trying to bash anyone but just not sure what the advantage is. Thanks again for this being a great resource!

Re: What am I missing?

Anonymous — Fri, 15 Apr 2016 09:36:55 GMT

Following. I want to know as well

Re: What am I missing?

deltatee — Fri, 15 Apr 2016 11:28:23 GMT

IMO the advantage comes from a lot of signup bonuses, or benefits for particular airlines/hotels that someone uses a lot. There are a lot of us on the boards with good scores who do not have wallets full of cards and hundreds of thousands in credit. I think the thing to remember is that you have to do what works best for your credit profile. Each new card takes a hit on your credit because of the HP and a hit to your AAOA. Additionally, some people's spending and lifestyle don't justify the costs of new cards.

Re: What am I missing?

Anonymous — Fri, 15 Apr 2016 11:31:52 GMT

I see a lot of people get more credit to keep their utilization low. It helps build up your score. Other people are just addicted to credit cards and the latest credit card trends. Others do it for the rewards you get when you get a new card.

Re: What am I missing?

takeshi74 — Fri, 15 Apr 2016 13:56:00 GMT

@Anonymous wrote:
Now, I understand the whole concenpt of available credit and usage but I am having a hard time understanding what the adantage is to lots of credit cards and available credit in the hundreds of thousands?

This is a very common topic so don't overlook the countless prior threads on the matter as a resource. It's not so much a matter of the limit itself. This is just an example of a site restricted Google search. Feel free to play with the keywords if needed and date filter results as desired.

https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=why%20high%20limits%20site%3Aficoforums.myfico.com

Consider:

The standard FICO factors and their typical weights: http://www.myfico.com/crediteducation/whatsinyourscore.aspx
Revolving Utilization has a significant impact and falls under Amounts Owed, the second biggest factor typically at ~30%.
Lower Revolving Utilization is better with a generally suggested maximum of 30% and ideal falling well under 10%
Revovling Utilization = balance(s) / limit(s).

What happens when you increase the numerator in a fraction? You end up with a smaller number. Since limit(s) is the denominator, having higher limits means that it's easier to have lower reported Revovling Utilization.

That said, one can always reduce Revolving Utilization by paying down balances prior to report date as well.

@Anonymous wrote:
Unless I hit the lottery or find a buried treasure in my backyard, I can see myself spending around $2000 per month on my credit cards and paying them full each month.

Again, considering the impact of Revolving Utilization, don't look at limits as how much you intend to spend. If the general suggestion is "do not exceed 30%" then you want around 3x your spend in limits but more doesn't hurt if it gets you lower. 10x your spend or more would probably be ideal.

My spend and limits put me at 3% and that's with a balance being carried on a 0% offer.

@Anonymous wrote:
why would I need any more than that?

It's up to you to determine that just as it is to determine which cards suit you and other things regarding your credit. Different people have different levels of spend, need different limits to cover their spend, keep revolving utilization in check, etc. You have to sort out what works for your and what your targets are. Instead on focusing on just limits, educate yourself on credit scoring and assessment. Use that info along with your spend and other criteria to determine what you need/want.

If your targeted Revolving Utilization is 2-3% then you wouldn't need any more than $80K - $100K for $2K of spend.

@Anonymous wrote:
Please understand that I am not trying to bash anyone but just not sure what the advantage is.

There are certainly those who continually seek out higher limits just for the sake of having higher limits or for bragging rights but, again, it's up to the individual to determine what one's priorities and goals are.

Re: What am I missing?

Anonymous — Fri, 15 Apr 2016 22:44:23 GMT

I agree and understand all of your responses and also realize that everyones credit and spending habits are unique to that person. I didn't know if I was missing the boat on this matter but it appears like it is more personal preference. As I rebuild back to my high 790 glory days I will be keeping it simple. I also think the more cards you have that your odds are greater for a stolen identity. JMO. As I said I love this forum and how addicting my rebuilding has become.

Re: What am I missing?

Anonymous — Fri, 15 Apr 2016 23:04:57 GMT

Because it's fun.

Re: What am I missing?

bourgogne — Fri, 15 Apr 2016 23:05:22 GMT

@Anonymous wrote:
I agree and understand all of your responses and also realize that everyones credit and spending habits are unique to that person. I didn't know if I was missing the boat on this matter but it appears like it is more personal preference. As I rebuild back to my high 790 glory days I will be keeping it simple. I also think the more cards you have that your odds are greater for a stolen identity. JMO. As I said I love this forum and how addicting my rebuilding has become.

as a person that also had 800s I feel you .. show us your cards, so to speak. curious where your scores are and what you are holding at the moment and what your rebuild plan is. I for one am always up for seeing other ways to go about it. take care

Re: What am I missing?

Aahz — Fri, 15 Apr 2016 23:46:05 GMT

@Anonymous wrote:
Now, I understand the whole concenpt of available credit and usage but I am having a hard time understanding what the adantage is to lots of credit cards and available credit in the hundreds of thousands? Unless I hit the lottery or find a buried treasure in my backyard, I can see myself spending around $2000 per month on my credit cards and paying them full each month. So if I was able to build my credit to the point of 4 or 5 cards with a total of $80,000 to $100,000 SL, why would I need any more than that?

Everyone has their own situation.

The only way I spend money is on my credit cards and (due to being self-employed) I spend between $10k and $25k per month and then PIF.

Due to a few recent family emergencies I'm currently carrying about $40k in 0% Balance Transfers. That wouldn't have been possible if I didn't have more than a dozen cards and over $250k in available credit.

Re: What am I missing?

kdm31091 — Fri, 15 Apr 2016 23:48:47 GMT

Some people just enjoy chasing after different perks, bonuses, whatever and basically, collecting cards as a hobby. To each their own. I am of the mindset that the more cards you spread your spending across, the less valuable each card really becomes because the rewards are so diluted that they become miniscule, depending on your income/spending.

If we're just talking about building a credit history, 3-4 cards with decent limits is plenty. More than that is not necessary for any purpose other than going after different rewards and such.

Re: What am I missing?

Anonymous — Sat, 16 Apr 2016 02:23:31 GMT

I like to feel secured. I can walk into any restaurant or hotel or even in an airport with super high credit lines and buy anything my heart desires. Being treated with the utmost care and respect is the experience I look for. Even if sometimes my appearance lacks. (surf shorts and t-shirt) All these cards let me do that. As for having many of them. I spend 9500 on credit a month and PIF. If I ever decide to carry a balance. I have utilization Buffers that companies wont start AA just because I got close to the limit on one card (stuff happens.) Anyway, I like spreading my wealth over the cards and I can redeem them for great rewards. Certain cards in the future, I may just keep for 1 year and burn them for the spend reward (maybe Baclay) but Amex, Chase (don't have yet,) Discover, Capital One, will always remain in my wallet.

Re: What am I missing?

Turbobuick — Sat, 16 Apr 2016 02:31:15 GMT

@Anonymous wrote:
I am still very new to the group, started here about a month ago. Let me say that there is a weath of info here and it has already improved my scores about 15+ points in last 30 days. Now, I understand the whole concenpt of available credit and usage but I am having a hard time understanding what the adantage is to lots of credit cards and available credit in the hundreds of thousands? Unless I hit the lottery or find a buried treasure in my backyard, I can see myself spending around $2000 per month on my credit cards and paying them full each month. So if I was able to build my credit to the point of 4 or 5 cards with a total of $80,000 to $100,000 SL, why would I need any more than that? Please understand that I am not trying to bash anyone but just not sure what the advantage is. Thanks again for this being a great resource!

It's a sickness and quickly becomes excessive compulsive. We try to get that same high we got when our first card arrived. Now it takes more and more cards to reach that same euphoric state. Then comes the binging and purging. Finally there's the withdrawls... wondering where our next fix will come from.

Seriously, 3-5 major cards should suffice most everyone IMHO.

Re: What am I missing?

Open123 — Sat, 16 Apr 2016 02:32:24 GMT

@Anonymous wrote:
I like to feel secured. I can walk into any restaurant or hotel or even in an airport with super high credit lines and buy anything my heart desires.

Never know if there's a big purchase you'd like to make, order that expensive item on the dinner menu, or have a card suddenly declined from fraud/review. Always best to have relatively large (10K+) on main cards from different lenders.

Re: What am I missing?

JamP — Sat, 16 Apr 2016 02:40:40 GMT

I don't have a very big credit line but I will tell you why I have so many cards.

At first it was to prove to myself that I could do it and rebuild my credit, then it became a bit of an addiction.

Lastly I want to be able maximize rewards on anything I purchase.

I do not use any debit cards anymore, everything gets put on a credit card.

Also my DW has horrible credit so I add her as AU so her credit can improve a bit too.

Re: What am I missing?

Open123 — Sat, 16 Apr 2016 02:44:30 GMT

@JamP wrote:
I don't have a very big credit line but I will tell you why I have so many cards.

At first it was to prove to myself that I could do it and rebuild my credit, then it became a bit of an addiction.

Lastly I want to be able maximize rewards on anything I purchase.

I do not use any debit cards anymore, everything gets put on a credit card.

Also my DW has horrible credit so I add her as AU so her credit can improve a bit too.

I suspect most are "addited" to rewards, much like they're addicted to making more money, rather than addicted to app'ing for the sake of app'ing.

*Edited* PS - I see no point in app'ing for a card without a sign-up bonus/benefits or superior rewards on spend, at least greater than 2% general spend.

Re: What am I missing?

kdm31091 — Sat, 16 Apr 2016 02:44:00 GMT

I do see a lot of people fall into a cycle of adding a bunch of cards to cover every possible category of spend, then getting overwhelmed or realizing it's not a significant gain, then closing cards, then getting "bored" with that, etc, etc. When adding any card, run the numbers. See how much in real dollars the card will add every month to your rewards. You may find its not worth it.

Re: What am I missing?

Anonymous — Sat, 16 Apr 2016 03:00:59 GMT

Wow, lots of great answers here! I really had not thought to much about the spedific rewards or sign up bonuses and can see where that would be useful. Always great to have another perspective. I can only imagine the spreadsheet that I would have to have to keep up with that may cards.....As I rebuild I am looking at several that will fit into my wallet and maximize my own rewards structure. I can see how it can be addicting because I already spend way to much time on this site trying to see how I can gain that next point increase.

Besides having to many credit cards in my wallet would probably throw my back out again.....

Re: What am I missing?

JamP — Sat, 16 Apr 2016 03:03:52 GMT

@kdm31091 wrote:
I do see a lot of people fall into a cycle of adding a bunch of cards to cover every possible category of spend, then getting overwhelmed or realizing it's not a significant gain, then closing cards, then getting "bored" with that, etc, etc. When adding any card, run the numbers. See how much in real dollars the card will add every month to your rewards. You may find its not worth it.

I definitely agree with you, as I said it became a bit of an addiction.

Luckily some places like Cap1 and Amex let you roll the cards credit line into another card, which I will be doing as soon as I spend the rewards or they become old enough to do so.

Overwhelmed sometimes, surely I do not need this many cards, and I will eventually close/merge some.

Re: What am I missing?

SouthJamaica — Sat, 16 Apr 2016 03:15:02 GMT

@Anonymous wrote:
I am still very new to the group, started here about a month ago. Let me say that there is a weath of info here and it has already improved my scores about 15+ points in last 30 days. Now, I understand the whole concenpt of available credit and usage but I am having a hard time understanding what the adantage is to lots of credit cards and available credit in the hundreds of thousands? Unless I hit the lottery or find a buried treasure in my backyard, I can see myself spending around $2000 per month on my credit cards and paying them full each month. So if I was able to build my credit to the point of 4 or 5 cards with a total of $80,000 to $100,000 SL, why would I need any more than that? Please understand that I am not trying to bash anyone but just not sure what the advantage is. Thanks again for this being a great resource!

It's good to have enough available credit so that if you have reported balances, they total 9% or less.

But it's not important to have more than that.

Re: What am I missing?

Anonymous — Sat, 16 Apr 2016 06:07:31 GMT

@Anonymous wrote:
Wow, lots of great answers here! I really had not thought to much about the spedific rewards or sign up bonuses and can see where that would be useful. Always great to have another perspective. I can only imagine the spreadsheet that I would have to have to keep up with that may cards.....As I rebuild I am looking at several that will fit into my wallet and maximize my own rewards structure. I can see how it can be addicting because I already spend way to much time on this site trying to see how I can gain that next point increase.

Besides having to many credit cards in my wallet would probably throw my back out again.....