topic Re: How important is CC diversity? in Credit Cards

How important is CC diversity?

Anonymous — Mon, 23 Apr 2012 19:15:54 GMT

Just out of curiousity, I'm wondering how important forum-goers think diversity in your CC portfolio is, and I mean specifically when it comes to two things:

(1) Brands (Mastercard, VISA, AMEX, Discover, etc...)

(2) Banks (Chase, BoA, First Premier...)

I've yet to see any compelling evidence overall to suggest that someone who only has AMEX or only has Chase cards would do any worse than one person who has 1 of each. I've seen quite a few posts here citing the desire to diversify their portfolio of cards and I understand the logical reasoning of not putting all of your eggs in one basket with finances, but I've also seen posts stating that they want to do it... "just because".

So how important is it to you and how important do you think it is to prospective lenders that you have a diverse credit portfolio, whether it's different banks or different brands?

Re: How important is CC diversity?

Anonymous — Mon, 23 Apr 2012 19:22:50 GMT

FICO wise a TL is a TL. However, lenders do want to see prime lenders and good CLs from national banks will likely make them more willing to follow suit. I don't think the payment network makes a single bit of difference.

Re: How important is CC diversity?

Anonymous — Mon, 23 Apr 2012 19:25:24 GMT

Good topic!

I'm of the opinion that it's best not to put all of one's eggs in one basket, so I like the idea of getting cards from more than one bank/issuer. That way, if you come to a parting of the ways for whatever reason, there are other options in your wallet. I also like having different cards for differnet purposes -- rewards, terms, etc. -- and then use the card that makes the best sense for a particular purchase.

Moreover, I think that one really needs to have more than just an Amex or Discover in one's wallet, as not every establishment accepts those cards. I know, I know... some people have stated that they won't do business with a company that doesn't accept Amex. But you never know when you might run into an emergency and need to tender payment to a merchant that doesn't accept Amex. For me personally, I'm just a lot happier feeling prepared for whatever life might throw.

My two cents, FWIW. I'm sure that others will have different opinions.

Re: How important is CC diversity?

Anonymous — Mon, 23 Apr 2012 20:12:30 GMT

A few weeks ago Mastered and Visa weren't processing for a lot of locations because of a third party intermediary being down. Having an Amex or Discover would still be preferable to paying cash or debit.

I've heard of people having all their assets with a bank or CU (checking, savings, CC, etc.) frozen. If they are your only company you are truly up a creek. Diversifying should have a practical purpose just like any decision however in the real world people are free to make decisions based on any criteria they like no matter how non sensical or emotional the reasoning.

Re: How important is CC diversity?

HikingFICOMountain — Mon, 23 Apr 2012 20:18:07 GMT

I am one of the posters that has admitted to wanting diversity in my CC portfolio.

My main reasons mirror the response above regarding not putting all eggs in one basket, having different options when certain places don't accept certain cards, and experiencing the various rewards/options that come with each type of card..

I am not sure if this is true, but if it helps a lender see me in a better light, then that would be a bonus. Also, at the expense of vanity, I think it would be satisfying to have the card diversity for the sake of accomplishment after a long road to credit recovery.

Re: How important is CC diversity?

navigatethis12 — Tue, 24 Apr 2012 00:14:44 GMT

I think one should have a relationship with two banks at the very least. That way if one credit card gets compromised or whatever, you still have another one as a back up. Issuers can also close the accounts at any time and if you only had cards from the one issuer you would be without cards for at least a week.

I would say you should have a card for every processing network, except Discover because no one accepts them anyway. There are some places that do not take Visa and some that do not take Mastercard. I have never seen a place that only accepts American Express though but I guess it is still good to have.

I try to tell people this with all accounts. Having all of your money in one place is never a good idea. I have more accounts than a person should have probably but I never have to worry about an account being shutdown or frozen for fraud and not having access to money.

Re: How important is CC diversity?

namvet — Tue, 24 Apr 2012 00:29:34 GMT

Very important for all the reasons already posted. For those new to credit it will take a while to achieve diversity but well worth the time and effort.

Re: How important is CC diversity?

Anonymous — Tue, 24 Apr 2012 00:48:44 GMT

So far, I pretty much have one of each, but am more than likely going to say goodbye to the Mastercard in about 11 months. Bank of America simply will not let the annual fee die regardless of the fact that I've had the account in good standing for 9 years.

What prompted this thread for me was a conversation I had with someone else who was stunned to hear I'd close out my only Mastercard and simply not try to replace it with another one. If Bank of America wants to budge on the annual fee and keep me without charging me per year, then I'd stay, but as it is, I don't use the card. Still, that wouldn't stop me from keeping it and using it from time to time... simply for the diversity factor and for the factors detailed by some of the other posters.

To be honest, I've found more places that wouldn't take American Express than places that didn't take Discover.

Seems like quite the disparity and something I'd expect from less cosmopolitan areas, but I haven't also taken my cards into the heart of Manhattan yet.

Although I have one of each of the Big Four (so to speak), bank-wise I possess a BoA as well as Chase and in leaving BoA, when it comes to banks, I leave myself at the mercy of Chase. Whether I eventually take up a Citi Mastercard or whatever other bank that has a Mastercard in the future, time will tell...

But I still think I'd be amiss to say that it is not somewhat important to have a certain amount of diversity within your wallet. I've found myself in places where Discover wasn't accepted in a restaurant, so there goes the 5% cashback, but I can at least get 1% from another card. Any penny earned simply for paying is a dollar well spent in my book.

Re: How important is CC diversity?

Anonymous — Tue, 24 Apr 2012 00:51:06 GMT

i like have having one of each, for the different rewards

Re: How important is CC diversity?

Revelate — Tue, 24 Apr 2012 01:41:03 GMT

Other than the transactional issue people have suggested if systems are down (it happens), I don't see too many issues with not having both a Visa and a MC: they're effectively interchangable pretty much anywhere in the US that I'm aware of... I think their merchant fees were nearly identical for a while too so there was really no reason not to accept both but perhaps someone can give better information on that.

Discover is the only one occasionally not accepted where I'm at in the Los Angeles area, I have yet to find a place which doesn't accept Amex so I'm fine with just the two networks rather than worrying about carrying four cards (or three since I don't have a Discover currently but I read the signs for giggles).

I'm thinking about walking over to Chase and opening an account for whatever local needs I have and shutting down my BOFA accounts as well so I can certainly understand that desire.

Re: How important is CC diversity?

Open123 — Tue, 24 Apr 2012 02:17:16 GMT

@Anonymous wrote:

I'm of the opinion that it's best not to put all of one's eggs in one basket, so I like the idea of getting cards from more than one bank/issuer. That way, if you come to a parting of the ways for whatever reason, there are other options in your wallet. I also like having different cards for differnet purposes -- rewards, terms, etc. -- and then use the card that makes the best sense for a particular purchase.

Couldn't agree more.

When possible, I always opt for divesification and the competition it encourages amongst venders and those with whom I do business. While I value professional relationships for many different reasons, I prefer that everyone with whom I work with realize I have different options and never take my business for granted.

Re: How important is CC diversity?

Anonymous — Tue, 24 Apr 2012 02:27:18 GMT

As my credit improved I started to think more about diversifying my portfolio. I started out with a plain BofA card and for a long time didn't pay much attention to what else was out there. I didn't know certain banks were well regarded or that there were cards that had more rewards or better benefits. Now, I think it's nice to have different cards to maximize rewards/benefits according to one's needs. It's also nice to have different creditors in case something happens to one card you have others to fall back on. I've also read that cards issued by national banks help with the credit mix aspect of one's FICO score.

Re: How important is CC diversity?

Anonymous — Tue, 24 Apr 2012 02:31:29 GMT

I'd rather not have more than two cards with one company but don't really feel diversity is important. I have a few good cards and that's pretty much enough. I don't know if creditors give much concern once you have decent cards/limits.

Re: How important is CC diversity?

Tonya-E — Tue, 24 Apr 2012 02:45:40 GMT

I definitely fit into the category of wanting a card from each of the 4 major issuers. I honestly do not see that it will help or hinder you fico-wise. However, each issuer has it's own perks that may or may not be offered by the other. Also, there are certain bill pay sites that give bonus perks if you use a certain "brand" of card. Lastly, some issuers are more prone to giving a lower APR if that is what you are seeking (though that is irrelevant if you pay off your balance every month). But if you do carry balances, Amex for instance, probably would not be your card of choice. It gives great rewards if utilized to the maximum benefit but doesn't offer a wonderful APR, except the 0% for BT. So really the only thing I see is a possible rewards benefit in some circumstances, a backup if the card if one (such as Amex or Discover) is not accepted somewhere, and the personal choice aspect of it. I can't really say there is necessarily a strong importance in having card diversity.

Re: How important is CC diversity?

Anonymous — Tue, 24 Apr 2012 02:47:45 GMT

Out of curiosity, what are the 4 major banks? BofA, Chase, Citi, Amex? Wells Fargo? Maybe I shouldn't have closed down my BofA card afterall

Re: How important is CC diversity?

Tonya-E — Tue, 24 Apr 2012 02:50:15 GMT

Visa, Mastercard, Amex, Discover...

Re: How important is CC diversity?

Anonymous — Tue, 24 Apr 2012 02:56:17 GMT

@tonyaether wrote:
Visa, Mastercard, Amex, Discover...

Ah ok, issuers. Somehow I misread it as bank, not thinking clearly its getting late!

Re: How important is CC diversity?

Tonya-E — Tue, 24 Apr 2012 02:58:05 GMT

Yep! Believe me I understand...I am getting little groggy over here too

Re: How important is CC diversity?

Anonymous — Tue, 24 Apr 2012 04:39:25 GMT

I don't think CC diversity plays into one's credit score directly, but by having that diversity it makes new issuers more comfortable extending credit to you during a manual review. When you apply for a card at a bank you have no prior relationship with, one of the primary factors for determining your credit limit is the highest existing limit you have.

Re: How important is CC diversity?

CreditScholar — Tue, 24 Apr 2012 06:20:29 GMT

CC diversity is important but not for your score. It's to cover your butt in case things go wrong. If you don't carry a backup, technical issues with one bank or network can leave you unable to buy things in an emergency.

I think it's always important to have at least 2 different types of cards from 2 different banks. This is doubly true if one of them is Amex (with FRs) or Discover which aren't as universally accepted. Common sense says not to put all of your eggs in one basket.