topic Re: Why so many CCs? in Credit Cards

Why so many CCs?

Dawn — Fri, 12 Oct 2007 14:26:36 GMT

As I continue reading these boards, I am confused about something that I see frequently.

Why do people feel the need to have so many CCs?

Does this flawed credit scoring system honestly work more in our favor if we maintain 5-6 CCs instead of one or two? I am having a hard time comprehending why we need to complicate our lives with trying to juggle more than one or two CCs.

I realize that lenders seem to think that if we can stay on top of mortgage and auto loans, as well as multiple CCs that we are somehow "better" risks than someone who only uses one CC. But ... how much logic is there to that theory? For every additional, active account we have, there seems to be GREATER risk that we will slip up. Why do we have to balance precariously on that tight rope when we could probably be far more dependable with just one or two cards?

For the past 15 years we have pretty much exclusively used one VISA card and PIF each month. We are "older than dirt" and were very reluctant to embrace the bank card life style. We previously only used store credit cards or cash (and had justification for multiple cards) ... but once we had an "all purpose" bank card, we saw no reason to keep the store cards active.

Are the CC TLs just stepping stones to auto loans and mortgages? Once you have those mortgages and auto loans (and their history on your record) do you really NEED to maintain multiple CCs?

In a day and age where people are over-extending themselves, it seems to me that this credit scoring system is only adding fuel to the fire. I find it very frustrating.

Re: Why so many CCs?

Anonymous — Fri, 12 Oct 2007 14:33:08 GMT

If you have Good to Excellent credit - you are right 2 CC's is plenty.

Some here are OCD on getting more cards
Some are diluting bad credit with good
some are killing off sub-prime cards with fees

I can tell you after graduating from credit HE** it feels very good to get real cards.

"They only give you credit when you don't need it"

Message Edited by Timothy on 10-12-2007 07:33 AM

Re: Why so many CCs?

Dawn — Fri, 12 Oct 2007 15:07:01 GMT

Timothy ... thank you for sharing that perspective. My heart aches for all of those who have been through credit HE** as you put it and I am seeing that the game plan is different for different people depending upon where they are in that credit cycle.

Message Edited by denbar2003 on 10-12-2007 10:07 AM

Re: Why so many CCs?

Anonymous — Fri, 12 Oct 2007 14:54:17 GMT

Well put Timothy. You gave 3 reasons for more cc's. My reasons are #2, and #3, with primary weight to #3. 3

And it feels VERY good to graduate from h.u.

Re: Why so many CCs?

John060675 — Fri, 12 Oct 2007 15:09:38 GMT

The reason I have 6 CC's now (and 1 or 2 more soon) is definitely to build a better reputation and higher FICO score (mine score used to be very bad).

There is a side reason, also. I want to make sure that I have emergency back-up, just in case. Until I can get $25,000 CL, then I am forced to carry 6 CC's.

Re: Why so many CCs?

Anonymous — Fri, 12 Oct 2007 15:43:20 GMT

If you think it's bad here, you should see some of the other credit forums. The $40K in CL across 14 CCs DW and I are juggling are gonna get simplified by setting the payment due dates to two dates. Half on the 15th and half on the 30th. If you juggle more than 1 or 2, you should do something similar.

More CCs means more leverage against one's CCCs. If they know you have 5 or 6 other CCs with several thousand in CL on each, one may be able to pressure a higher CL and/or lower APR. Works with some, not so much with others.

More CCs is also a form of insurance. Banks get bought and sold all the time. That one CCC which is judged best in the world by whomever might get bought by the worst CCC in the world tomorrow. Just like with investing, not all the eggs in one basket.

There are anecdotes about people who have 2 or 3 CCs, they've kept them for years, and they have FICO scores in the 800s. However, I find many more anecdotes about people who've been forced into mandatory arbitration, had judgments against them, or otherwise fallen into Credit Gehenna when they either never owed the money (like if they were only an AU on a CC) or the account was never late. Some of these might have been mitigated by more CCs.

I think it used to be true that one was safest with just a few CCs. These days, and not just as someone who has climbed outta the Pit of Credit H*ll and is still crawling over the rim of the Abyss, I think more is better.

People can get into trouble with just 1 or 2 CCs. But if you can manage 1 or 2 CCs, then you can manage 5, 10, or even 20.

As for mortgages and car loans, we're a much more mobile nation today than say even 15-20 years ago. Might not stay in that home for 30 years.

Re: Why so many CCs?

Anonymous — Fri, 12 Oct 2007 16:05:50 GMT

Noah,

Well put! I love your post.

I have high credit lines on my AMEX cards. But I don't have those same lines on my Visa or MC.

I still had some crappy cards on my reports that I got after BK. I am not about to pay a fee for a credit card unless it's my AMEX Gold rewards! I have applied for new cards, now I am a member of the Sleigh Center and have NO plans on getting any more.

My goal is to lie low and get credit line increases. My credit scores took a huge DIVE in the last month. Because of inquires and collection accounts appearing. I am working on removing those items.

But I don't want AMEX to be the only card with a $25K. I have investments and savings but it takes time to get a very large amount of money moved into an account I can touch. My credit cards give me the feeling of protection in case something should happen. This is why I try to keep the balances very low or none at all.

I figure in 6 months some of my accounts will age and a ton of inquires from last year will no longer effect my scores.

Re: Why so many CCs?

Anonymous — Fri, 12 Oct 2007 16:41:39 GMT

I will end up keeping some cards for age (store cards) and replace some of the not-so-good ones with better MC/V but in order to do this I need the better one before I dump the not-so-good one.

It's shuffling them until I get the mix I am happy with and that suits my life.

Case in point, I need to make a trip next month because Mom is having surgery - a hotel room for at least 2-3 nights, food, and gas there and back - spreading this over several cards doesn't kill my util on any one.

Re: Why so many CCs?

fused — Fri, 12 Oct 2007 18:49:17 GMT

OP, good questions and a very interesting subject! I would think there would be a lot more discussion on this subject in this forum but there hasn't been much. Personally, I don't think anyone has to have a lot of CCs to establish a solid CC history, 2-3 CCs is sufficient.

I have 5 credit cards, 1 lousy Macy's and 1 charge card. I choose to have this many cards because all but one, Macy's, has their own perks. For me it's all about the perks...cash back, FF miles and points converted to $ for my little girl's 529 college savings plan.

If given the choice I would much rather have total available credit of 50K spread out on 3 CCs versus 10 CCs. Duh, it's easier to manage 3 CCs than 10.

Re: Why so many CCs?

Anonymous — Fri, 12 Oct 2007 19:12:07 GMT

I only use 2-3 cards for personal use. The rest are for business to help with accounting. 1 card per expense, 1 total per expense. Takes seconds to do accounting.

But there is an advantage in scoring later down the road with more cards. More open accounts to keep up average age when they get older.

As for the obsession for so many cards. After being denied for so long it feels good to be approved by all the places that denied you I guess. Also with credit lines of only $200 it is another way to raise total CL for UTL. But if you have a few high limit cards it doesn't matter nearly as much.

Re: Why so many CCs?

Anonymous — Fri, 12 Oct 2007 19:14:36 GMT

I have several cards and depending on my use for them would answer your questions. I have certain store cards for special financing offers, I have cash back cards for everyday use. I have biz credit now for the obvious. Yes it can be a matter of uti or it can be a matter of smart management. I always compare special offers and had it not been for a 'Too good to refuse' BT offer from Cap1 it would be shredded. It probably will be once the balance is paid off.

Re: Why so many CCs?

Anonymous — Sat, 13 Oct 2007 00:48:09 GMT

I probably carry more cards than the average person, and that's even after a marathon session of canceling cards back in '96. There are actually a couple of reasons I wound up with holding on to multiple cards.

Diversity: Amex, Discover, Visa and MC

When I used to travel more often and vacation in Canada (Quebec and BC), I kept finding places that didn't take Visa, most took Amex and some took both Amex and MC. Things may have changed by now though. I also found that certain cards seemed to offer better exchange rates than others.

DH and I were really into our Discover for the cashback for some period then got tired of our card getting randomly frozen for fraud alert. His spending pattern was different from mine, so that might have kept their system confused. For example, we'd get a call or have to call in to find out they froze our account because we visited a gas station twice in one day. "Suspicious activity."

There was also the phase I went through using cards based on billing cycles. I labeled DH's cards with dates, "26-12," "2-16," etc to maximize the number of days money earned interest before being used to pay bills. He rolled his eyes but like the good man he is, he humored me. It didn't last at least. Chuckle.

Also, there were his and hers cards...the cards we each had before meeting each other. And since these are our oldest cards (18-20 years), we're not likely to close them any time soon.

Today, we mostly use our Amex. We recently used our Discover card to take advantage of the current 5% promo, but I made sure to call them before going out of town to say, "We are going to be in HI and we will use our Discover card, could you please put a note mentioning that in our account?" Sigh. We have a Visa for the places that don't take Amex and a MC for places who don't take Visa nor Amex (like Sam's Club).

I have noticed over the years, rewards programs change enough that my rewards cards seem to jockey back and forth as to which ones have the better program for us. Shrug.

So it depends on how much management one is willing and able to do.

[Edited to add line breaks.]

Message Edited by PenguinGeek on 10-12-2007 08:48 PM

Re: Why so many CCs?

Anonymous — Sat, 13 Oct 2007 00:52:11 GMT

"There was also the phase I went through using cards based on billing cycles. I labeled DH's cards with dates, "26-12," "2-16," etc to maximize the number of days money earned interest before being used to pay bills. He rolled his eyes but like the good man he is, he humored me. It didn't last at least. Chuckle."

LOL.. I shudder to think what would happen if I tried that. Probably get me committed. It's very tempting though.

Honestly, I think it's a great idea

Re: Why so many CCs?

Anonymous — Sat, 13 Oct 2007 01:31:49 GMT

Basic

card 1 Amex Or Discover , PIF

card 2 rewards Visa or Mastercard backup for card 1 PIF

card 3 Visa or Mastercard with a low preferably fix rate Revolve

Additionally a Retail Rewards card that awards bonus rewards on purchases at your Favorite Merchant. PIF

Re: Why so many CCs?

Anonymous — Sat, 13 Oct 2007 01:58:04 GMT

Now see I have two retail rewards cards (electronics) and depending on which store has the best deat will tell me which one I am using. The other two retail cards I have were Wally World and Target though neither gets a lot of use but I'm not closing them. Especially Wally world since it is the second oldest card I have. I don't use them ften but right now BB has a 36 mos same as cash. Too bad I don't have room for another television set...lol!!! But seriously, I carry both CC and Best Buy because I buy a lot of electronics and peripherals, that plus a teenaged kid. No way will Visa give me those financing deals and I usuallly wind up paying no interest whatsoever.

I also find that if you tell the competition that CC or BB offered you a special finance or rate, you can barter for the same item. Its how I purchased my 1800.00 (before tax) television for just over 1100.00 (after taxes). But that was HHGregg and CC fighting for my business. To bad I don't have an HHGregg card. Yes bartering is still possible and I will usually do it on a big ticket item. Works a little better if you have a bill of sale in hand.

On second thought, uh NO!! Just checked and its issued by GEMB, probably wind up with a 100.00 limit. lol!!

Message Edited by Brammy on 10-12-2007 09:54 PM

Message Edited by Brammy on 10-12-2007 09:55 PM

Message Edited by Brammy on 10-12-2007 09:58 PM

Re: Why so many CCs?

smallfry — Sat, 13 Oct 2007 02:25:49 GMT

@Anonymous wrote:
I only use 2-3 cards for personal use. The rest are for business to help with accounting. 1 card per expense, 1 total per expense. Takes seconds to do accounting.

But there is an advantage in scoring later down the road with more cards. More open accounts to keep up average age when they get older.

As for the obsession for so many cards. After being denied for so long it feels good to be approved by all the places that denied you I guess. Also with credit lines of only $200 it is another way to raise total CL for UTL. But if you have a few high limit cards it doesn't matter nearly as much.

Helps with average age? I dunno. In ten years after everything closed drops off my reports my average age will be 10 years on all the new accounts I have opened this year whether I open more cards now or not. I don't see your point but maybe I am missing something.

Re: Why so many CCs?

Anonymous — Sat, 13 Oct 2007 03:01:25 GMT

I also often wonder how do individuals manage 8+ credit cards every month. For me 6 is a pain. My plan is to get down to three (with high limits) - slowly - over the next 5 years.

I think I want one Amex, one mastercard, and one visa. I personally despise store cards - but who knows...maybe I'll have four because of a future best buy shopping spree!

Re: Why so many CCs?

Anonymous — Sat, 13 Oct 2007 03:10:24 GMT

I have 9 and the DW has 15-

Thank you online banking-and MS Money.

ALL of my bills get automatically pulled into online banking automatically EXCEPT mortgage and car loan.
even Power, phone/cable/internet, cell, water.

Takes about 60 seconds once a week to pay them.

She will be down to 4 (Plus 2 AU) of her own next week when I finish paying all of hers off.

One of those 4 is her current allowance card- (can't come up with a better word) that gets PIF every month.

Re: Why so many CCs?

smallfry — Sat, 13 Oct 2007 03:41:30 GMT

@pjriverap wrote:
I also often wonder how do individuals manage 8+ credit cards every month. For me 6 is a pain. My plan is to get down to three (with high limits) - slowly - over the next 5 years.

I think I want one Amex, one mastercard, and one visa. I personally despise store cards - but who knows...maybe I'll have four because of a future best buy shopping spree!

I don't need a slew of cards myself but I wouldn't go lower than my present 5 plus a store card. You need to keep your options open in case a lender goes wacky on you. I think I might go for another one or two not quite sure yet.

Re: Why so many CCs?

Anonymous — Sat, 13 Oct 2007 16:18:55 GMT

@smallfry wrote:
Helps with average age? I dunno. In ten years after everything closed drops off my reports my average age will be 10 years on all the new accounts I have opened this year whether I open more cards now or not. I don't see your point but maybe I am missing something.

Example. (not to be taken literally)

Person A has 20 credit cards that are all 10 years old. All open.
20x10=200 dived by 20 accounts = avg 10.0 years.
Person A adds 3 new accounts.
200 dived by 23 accounts = avg 8.7 years.

Person B has 4 credit cards that are all 10 years old. All open.
4x10=40 dived by 4 accounts = avg 10.0 years.
Person B adds 3 new accounts.
40 dived by 7 accounts = avg 5.7 years.

Person A with 20 credit cards has an average age 3 years older.

Now look at this.
Person A adds 15 new accounts
200 dived by 35 accounts = avg 5.7 years.

Person A with more credit cards can add (5 times) more new accounts before matching average age compared to Person B who only opened 3 new accounts.

You need to add all the cards when your average age is very young and let them age 10 years. Mostly for people rebuilding or new to credit since they can't really lower their avg age much lower than it already is. They only can gain.

For people with an established avg age, it's a little late to add all these cards because it will just lower their avg.

To answer your question... Yes after 10 years closed accounts will fall off and avg will return to normal. But for the first few years after the new accounts are open the age will drop. And to be honest it probably doesn't hurt that much even if your avg age drops a few years. A few points. Maybe I go over board a little sometimes?

But it really depends on how many accounts a person needs to open. If they only open 1-3 a year, it's not a big deal. But if they open many for business then they would need more cards to keep up their average age. It's about keeping a balance.

Message Edited by ilovepizza on 10-13-2007 09:18 AM