topic Re: Optimum Number of Credit Cards? in Credit Cards

Optimum Number of Credit Cards?

creditguy321 — Tue, 23 Aug 2022 14:29:22 GMT

I realize this is in some ways relative to each individual credit profile etc. but is there generally speaking an opitum amount of credit cards to have at any one time? I've been told recently that it's three cards, however judging by some of the signatures on this forum, that number may be on the low side lol.

Any general advice on this and and factors one might want to consider with carrying more cards?

Re: Optimum Number of Credit Cards?

CreditMarathoner — Tue, 23 Aug 2022 14:28:28 GMT

This question seems to come up a lot here, and if you ask 10 people, you're likely to get 12 different answers.

There is no "right" or "wrong" answer really. It depends on the individual. Some are fine with 1 or 2 cards, some want 20 or more. This forum has a lot of enthusiasts who collect a lot of cards, but on average, most Americans have 2-3 cards.

It's often said that 3 is optimal for FICO score purposes, especially if you practize AZEO (All Zero Except One), letting one card report a small balance while the others report zero. I found my scores improved even more when I added a 4th card, but your mileage may vary depending on your profile.

It's really up to you. More cards give you additional backup in case one is lost, stolen or is closed by the issuer. More cards give you more rewards options, as you can choose the card that offers the best reward for your purchase. More cards means a higher total credit line, helping keep utilization down (as long as you don't run up your balances!) But more cards is more work to manage, and if you don't have the discipline to control your spending, it can lead to a debt spiral.

So, there isn't really a one-size-fits-all answer. If you want more cards, and your profile supports it, get more cards. If you're comfortable with with what you have, stick with that. If you feel overwhelmed with what you have, maybe consider thinning the herd.

Looking at your sig, and the fact you're rebuilding, you're doing well in your journey so far. Gardening (sitting tight without applying for more cards) to let your accounts age and mature can be a big help too. Waiting a few years will open up opportunities for better offers (higher limits, lower APRs, better card options) down the road. As my username indicates, credit is a marathon, not a sprint.

Re: Optimum Number of Credit Cards?

coldfusion — Tue, 23 Aug 2022 14:28:23 GMT

To a large part that depends on context.

There are mininum numbers tied to FICO scoring, people have different thresholds regarding the number of cards they feel comfortable in managing, some issuers include factors like the number of cards already held and/or total credit limit across all cards in defining their target demographic (i.e. if they think you have too many cards or too much credit limit extended across all cards they'll likely not approve you).

The number of cards you feel comfortable in being able to properly manage is a big factor.

Re: Optimum Number of Credit Cards?

calisig — Tue, 23 Aug 2022 21:14:56 GMT

There is no correct answer for how many cards is optimal. I think three is minimum for optimizing credit score, but beyond that, it depends on your strategy, how different cards help you fulfil that strategy, and how much effort you want to put into managing more cards. My strategy is mostly cash back, so with that in mind, my optimal setup would include a 1.5 - 3% on everything base card, two or more 5% rotators, and any cards that make more than 1.5 - 3% in your high spend categories, such as gas, dining, travel, and groceries. Spending caps are hard to avoid, and I don't mind quarterly or yearly caps that allow me to spread spending around, but I personally don't care for cards that have monthly spending caps (such as Citi Custom Cash). I also avoid cards with spending caps that amount to less than $6-7k / year. Core cards should have no annual fee - so to age well and still be useful. Also a card that covered any additional benefits you think you might need not covered by your other cards, such as special access or better purchase / warranty / car rental / travel insurance / etc. I like to maintain cards across multiple banks and networks, but if they earn points, make sure multiple cards doesn't spread points building too thin to make redemption difficult. And then maybe one card that isn't necessarily optimal but that you just want to play around with. Good Luck

Re: Optimum Number of Credit Cards?

SouthJamaica — Tue, 23 Aug 2022 14:40:04 GMT

@creditguy321 wrote:
I realize this is in some ways relative to each individual credit profile etc. but is there generally speaking an opitum amount of credit cards to have at any one time? I've been told recently that it's three cards, however judging my some of the signatures on this forum, that number may be on the low side lol.

Any general advice on this and and factors one might want to consider with carrying more cards?

No there is no optimum number of credit cards.

The optimum number depends on your goals, needs, interests, habits, and willingness to closely manage your accounts, so there are as many optimum numbers as there are people.

Sometimes the number 3 is mentioned as a minimum, since it makes it easier to optimize one's FICO score by having one card report a balance while the other 2 report at zero. But (a) that is a suggested minimum, not a suggested optimum, and (b) you can get perfect scores with less than 3 cards.

For this guy 1,497 was the optimum number. But that wasn't good enough for this guy, who felt he needed 1,562.

Re: Optimum Number of Credit Cards?

simplynoir — Tue, 23 Aug 2022 14:42:15 GMT

Really, in the end it's all about what the person wants with their credit cards. For scoring purposes somewhere in the range of 3-5 cards is all one needs to keep FICO happy. Going beyond that though there's a lot of options to consider

Some just want to have a few cards that are going to be their main drivers. A few things for example that does is minimizes how much to keep track of monthly to make paying easier and watch out for possible fraud, presumably makes it easier to choose the card you want to spend on at any given time and depending on how you choose your cards can be settled into an ecosystem like Chase's Ultimate Rewards or American Express's Membership Rewards for maximizing earning potential. A nice, simple way for the average person to use their spend

Next level I see is those that are like the above but apply for cards when it seems beneficial to them. This includes maybe they want to purchase items/services but not necessarily pay it off right away (PIF) so are looking for a 0% APR intro offer so they can spread the payments out. Perhaps they have an existing balance they need to balance transfer out so the interest doesn't eat them out of money so that's another option with BT cards. Maybe they have an upcoming large purchase and want to earn a signing bonus go with it. With examples like these they keep their card count manageable and might even PC to a more useful card after or even close the card once offer is used and they don't see any future benefit from it

Then you have the people who have a lot of cards. Like A LOT. These people collect cards like Pokemon and all have their reasons for it. Some just are in it to collect signup bonuses from various lenders to get a lot of money/travel points in a hurry as long as they play by the bank's rules with regards to apps and churning; they spend what they need to spend and go to the next card. Others are to maximize their spending with many category cards that covers all their expenses, with this cards earning roughly in the 3%-5% range are good enough for them. Then I see those that want to diversify their card portfolio and collect cards from various banks; this could be from things like chasing low/fixed APRs to making sure in the event something happened to one set of cards from a bank getting shutdown/closed they have backup options to fall back on

I could go on and on but you get the point. And even if one chooses a strategy for how they want their cards to work for them doesn't mean their opinion on them will change in the future. It is all a very fluid situation. So just stick with what you want to go along with what your current financial situation is and you should be fine. Someone who explains why their system/setup works doesn't necessarily mean it will work for others

Re: Optimum Number of Credit Cards?

Anonymous — Tue, 23 Aug 2022 15:22:02 GMT

@SouthJamaica wrote:

The optimum number depends on your goals, needs, interests, habits, and willingness to closely manage your accounts, so there are as many optimum numbers as there are people.

My former math background made me scream "pigeon hole principle"! There would only be as many optimum numbers as people if every person chose a different number, and as the highest number of cards is less than 1,600 and the number of people is considerably more....(This assumes that people have got their optimum number, I guess it could be the case that everyone wants a different number greater than 1,600 but...)

Sorry for the disruption, I agree with the much weaker statement that the optimum number is determined by individual factors!

Re: Optimum Number of Credit Cards?

Kforce — Tue, 23 Aug 2022 18:32:11 GMT

@creditguy321 wrote:
Any general advice on this and and factors one might want to consider with carrying more cards?

The value of your time managing a new card vs the rewards or other value it really adds.

I believe a lot of false advertising is plentiful about rewards and benefits. Also the average consumer performs false math by throwing in spend that might no be real. (Need to look at many months of real spend). Not subtracting current rewards on same spend, and not subtracting even 1c for time managing a new card on top of current set.

New 5% rotating card: Does not = (500*0.05) = $25/month gain

More like shifting spend from a current 3% card to the new 5% (2% gain)

Maybe 425 spend, if looking at real average gas or utils or amazon (YMMV)

Subtracting value of your time. ((Monthly Income/168-Hrs)/60 min in hr) = Value per min of time.

Time value per min * time managing each card every month. (2 min a week, * pick a number for how you manage your cards)

* Note example values only *

$ 7000/mo = 70c a min * 8 min month = $5.60 per credit card/month (Time loss value)

Cards real value(425*0.02) - 5.60) = $3.50/mo

If income is low and base card 1.5% or 2% value gos up

Same 5% with 2% base card and $4000/mo income

Cards real value(425*0.03) - 3.17) = $9.58/mo

* Note far from the (500*0.05) of $25, however $10/mo is $10/month

Math for thought, with high income and 2.5% or 3% base cards 4% & 5% = negative value

Same 5% with 3% base card and 14,000/mo income

Cards real value: ((425*0.02) - 11.11) = $ -2.61/mo (Loss)

Re: Optimum Number of Credit Cards?

xenon3030 — Tue, 23 Aug 2022 18:35:25 GMT

Any number >3 is fine. There is no optimum number.

By evolving the current CCs and getting more cards and increasing the total CL by time, you would be less prone to high utilization ratio, especially in case of having financial issues for a few months in future (e.g. losing job). Those balance transfer offers from multiple cards can be useful at that time.

Re: Optimum Number of Credit Cards?

Priory_Man — Tue, 23 Aug 2022 19:03:25 GMT

@creditguy321 wrote:
I realize this is in some ways relative to each individual credit profile etc. but is there generally speaking an opitum amount of credit cards to have at any one time? I've been told recently that it's three cards, however judging by some of the signatures on this forum, that number may be on the low side lol.

Any general advice on this and and factors one might want to consider with carrying more cards?

Always, one more

Re: Optimum Number of Credit Cards?

CreditCobra — Tue, 23 Aug 2022 19:12:30 GMT

For me it was never about more cards, as much as it was about maximizing rewards. Generally speaking I'm getting somewhere between 3% and 10% back on nearly all spends. I have a few situations where I have a 3% cash back situation, and I've got my eye on a card that would increase that to 5%. I've also collected a few SUBs along the way.

Re: Optimum Number of Credit Cards?

CreditMarathoner — Tue, 23 Aug 2022 19:24:48 GMT

@xenon3030 wrote:
Any number >3 is fine. There is no optimum number.

3 or more helps with FICO scores if you need to help them, but it's possible to have great scores with 1 or 2, or even no cards, depending on your profile.

In my case, adding a 4th card seemed to help a lot more than adding a 3rd. Even being on a new account scorecard for the 1st year, my scores are a lot higher during the first year of my 4th card than it was in the first year of my 3rd. I'm curious if my scores will jump at all when my newest account hits a year. I don't know if it was the 4th card, total number of accounts, AAoA, or higher TCL/lower utilization that was the factor, but I'll take the added time to manage a 4th card (which frankly, I don't use often but I wanted for its great SUB) to have optimal scores that don't need constant AZEO to keep them in the "exceptional" range.

I have a hunch adding a 5th in my case would do little to nothing for my scores, so I'm not going to bother for that reason. 4 is my optimal number.

But, unless you're planning on a mortgage or refinance in the near future, or other important application, there's little need to micromanage your credit score anyway. Add cards if there are cards you want to add for their rewards, perks, benefits, SUB or additional CL, rather than for FICO. Based on OP's signature, they already have 5 cards, 4 of them revolvers, so adding more cards won't help FICO other than for padding utilization.

As I mentioned before, the optimum number of cards is how many are right for YOU. Whether it's 1, 3, 5, 10, or 1,500. I think diminishing returns starts to kick in after 6 or so. Or is that 60?

Re: Optimum Number of Credit Cards?

creditguy321 — Tue, 23 Aug 2022 20:26:27 GMT

@CreditMarathoner wrote:
@xenon3030 wrote:
Any number >3 is fine. There is no optimum number.
3 or more helps with FICO scores if you need to help them, but it's possible to have great scores with 1 or 2, or even no cards, depending on your profile.

In my case, adding a 4th card seemed to help a lot more than adding a 3rd. Even being on a new account scorecard for the 1st year, my scores are a lot higher during the first year of my 4th card than it was in the first year of my 3rd. I'm curious if my scores will jump at all when my newest account hits a year. I don't know if it was the 4th card, total number of accounts, AAoA, or higher TCL/lower utilization that was the factor, but I'll take the added time to manage a 4th card (which frankly, I don't use often but I wanted for its great SUB) to have optimal scores that don't need constant AZEO to keep them in the "exceptional" range.

I have a hunch adding a 5th in my case would do little to nothing for my scores, so I'm not going to bother for that reason. 4 is my optimal number.

But, unless you're planning on a mortgage or refinance in the near future, or other important application, there's little need to micromanage your credit score anyway. Add cards if there are cards you want to add for their rewards, perks, benefits, SUB or additional CL, rather than for FICO. Based on OP's signature, they already have 5 cards, 4 of them revolvers, so adding more cards won't help FICO other than for padding utilization.

As I mentioned before, the optimum number of cards is how many are right for YOU. Whether it's 1, 3, 5, 10, or 1,500. I think diminishing returns starts to kick in after 6 or so. Or is that 60?

This was immensely helpful and I do appreciate the thorough response. I've seen "Sub" referred to frequently. What does that mean?

With the five cards I have I've been thinking that between managing all the cards, and wanting to vary what I have I don't want to take on anymore anyhow. I moreso wanted to ensure I wasn't hurting my progress by having >3 cards.

My strategy within the next year is to sit on what I have and garden. I'd like to upgrade the Green Card to a Gold card within the next year and then apply for the Platinum card as I think both of those cards will fit my needs from a rewards standpoint very well. If that goes as I planned I intend to close out the Cap 1 QS with the $600 SL to maitain the 5 cards.

Re: Optimum Number of Credit Cards?

CashOutReFi — Tue, 23 Aug 2022 20:16:54 GMT

IMHO? I'm thinking practical vs what benefits your score most.

1. Low enough number that you don't forget a due date

2. High enough that you don't dread your score dropping from apping for a new card (i.e. your AAoA doesn't cut in half and tank your score after applying for one card)

Re: Optimum Number of Credit Cards?

CreditMarathoner — Tue, 23 Aug 2022 20:34:41 GMT

@creditguy321 wrote:
This was immensely helpful and I do appreciate the thorough response. I've seen "Sub" referred to frequently. What does that mean?

SUB = Sign Up Bonus.

With the five cards I have I've been thinking that between managing all the cards, and wanting to vary what I have I don't want to take on anymore anyhow. I moreso wanted to ensure I wasn't hurting my progress by having >3 cards.

My strategy within the next year is to sit on what I have and garden. I'd like to upgrade the Green Card to a Gold card within the next year and then apply for the Platinum card as I think both of those cards will fit my needs from a rewards standpoint very well.

You're in a good spot to garden now, with 5 tradelines in good standing. This will let your accounts age and any baddies on your report to age as well. Over time you may get automatic CLIs, or approved CLI requests to raise your limits, and in time you'll be able to get into even better cards like the Amex Gold/Platinum.

How old are your accounts now?

Re: Optimum Number of Credit Cards?

Anonymous — Tue, 23 Aug 2022 20:38:22 GMT

@CreditMarathoner wrote:
As I mentioned before, the optimum number of cards is how many are right for YOU. Whether it's 1, 3, 5, 10, or 1,500. I think diminishing returns starts to kick in after 6 or so. Or is that 60?

With the possible exception of rewards redeemed for premium travel (and the real value of that is another discussion!) I think diminishing returns starts pretty quickly, probably quicker than many of us are willing to admit. Yes, I have $500 a year spend on [choose your own special category] and I currently use my catch all 2% on that. But LTL Bank has a new card that gives 3% on that and $100 SUB! That's $105 the first year and $5 every year after that, be an idiot to turn that down, right?

Now IMO SUBS are the real driver. I doubt if many of us would bother with a card that gives an extra $5 a year. (Well...., maybe..) I think the issue is to realize that for many of us, $100, $200, even $300 SUB, while nice, isn't really that much money in the scheme of things. While busy applying for it and managing it, and applying for CLIs every other day, we could be doing other (perhaps less enjoyable things to us) that would bring similar returns

So get the first few cards that really matter, where you have high spend and the cards offer a good % (But realize even then this is unlikely to all that valuable). Then consider, if I didn't enjoy it, would I bother with this card? And the decide if the enjoyment is worth it, which it well might be!

Re: Optimum Number of Credit Cards?

creditguy321 — Tue, 23 Aug 2022 20:59:03 GMT

How old are your accounts now?

The Quicksilver is the oldest at almost 4 years old. The other 4 cards were all opened within the last 4 months with the Amex Green being the newset being opened a couple of days ago.

Re: Optimum Number of Credit Cards?

calisig — Tue, 23 Aug 2022 21:09:04 GMT

@CreditCobra wrote:
I have a few situations where I have a 3% cash back situation, and I've got my eye on a card that would increase that to 5%.

which card you got your eye on?

Re: Optimum Number of Credit Cards?

wasCB14 — Tue, 23 Aug 2022 21:27:33 GMT

@Anonymous wrote:
@SouthJamaica wrote:

The optimum number depends on your goals, needs, interests, habits, and willingness to closely manage your accounts, so there are as many optimum numbers as there are people.

My former math background made me scream "pigeon hole principle"! There would only be as many optimum numbers as people if every person chose a different number, and as the highest number of cards is less than 1,600 and the number of people is considerably more....(This assumes that people have got their optimum number, I guess it could be the case that everyone wants a different number greater than 1,600 but...)

Sorry for the disruption, I agree with the much weaker statement that the optimum number is determined by individual factors!

Though given how quickly and casually some of us can change our minds about the ideal number of cards (without major lifestyle/employment/business changes driving them), I'm not sure that we need to be limited to whole numbers.

Re: Optimum Number of Credit Cards?

CreditCobra — Tue, 23 Aug 2022 21:42:10 GMT

@calisig wrote:
@CreditCobra wrote:
I have a few situations where I have a 3% cash back situation, and I've got my eye on a card that would increase that to 5%.
which card you got your eye on?

Elan Max Cash (or two) would change out my cable, power, phone, streaming, from 3% to 5%, so that's one card (or maybe two). I can pay my insurance (State Farm) through Apple Pay, so the Ralph's (or any other Kroger card) would take me to 5% there too. Lastly, the Chase Freedom Flex would add to my growing collection of rotators.