topic How many Credit cards are too many?? in General Credit Topics

How many Credit cards are too many??

Anonymous — Wed, 17 Nov 2010 08:04:24 GMT

Some ppl have 5, some have more than 10 credit cards. How many credit cards are considered too many? Is it depening on your credit history?

Re: How many Credit cards are too many??

ficonightmare — Wed, 17 Nov 2010 12:15:32 GMT

I'm also wondering if FICO dings you for too many accounts..

Re: How many Credit cards are too many??

haulingthescoreup — Wed, 17 Nov 2010 15:06:10 GMT

FICO can ding you for too many accounts, both open and closed, but it's a very minor little ding, as best as we can tell, maybe a couple of points. We start seeing the flag somewhere around 30 accounts, and I've only seen one screenshot of this showing as an actual negative factor on screen two. (Those are the ones to pay attention to.)

So realistically, "too many CC's" are however many make it difficult for you to stay on top of your accounts. And this varies by consumer.

Things to think about:

Do you have the income flow to pay off all your cards every month without breaking a sweat?

Although many CCC's will let you change your dates, not all will. This means that you might have a dozen different due dates scattered throughout the month, in addition to your mortgage, you auto loan, your utility bill, your cable bill, and on and on. Do you really want to be thinking every day about whether something is due in the next few hours?

It's a good idea to use each card frequently to keep the lender from closing it. Generally store cards only need to be used maybe every 6 months, whereas bank cards should be used every 2-3 months. However, HSBC has been known to slam the door if their bank cards aren't used monthly. Do you have the free time to remember to pull out a specific card and go buy something, just to keep it active?

Since you need to periodically use each card, is there going to be a temptation to buy more than you would if you were shopping with your checkbook, using the excuse that you need to exercise your plastic? Will your debt rise, along with a bunch of unneeded junk, in the name of keeping your CCC's happy?

If you use rewards cards, you will generally maximize your rewards if you use fewer cards. Rewards can get pretty piddly if you only use a card for your phone bill once a month.

Just from personal experience, I've found that what would work best for me is maybe 6 cards. One or two high-CL CU cards to make util management easy, 3-4 rewards cards for gas, groceries, restaurants, and travel, and a card that sends lots of offers for 0% BT's (handy as a just-in-case.) Maybe a store card for a store where I shop a lot, and that gives killer deals for cardholders (early sales, great discounts, free shipping, etc.) Others are happy with 3 cards, and still others happily juggle 20.

Your best bet is to figure out how CC's can fit into a smart personal finance plan, research which cards will match your wants (and abilities), do further research to find what it will take to qualify for these cards, and make this your CC goal. Then write it down and stick to it. Sticky it on your laptop, and don't read the CC boards without reminding yourself what your goals are. And it's fine to change desired CC's when you find something better. But drop a card from your list and replace it; don't just keep adding and adding.

Re: How many Credit cards are too many??

MarineVietVet — Wed, 17 Nov 2010 15:20:33 GMT

To add just one comment to the excellent post by HTSU if you lie awake at night trying to remember which card you need to use this month to show activity then you have too many cards.

As far as scoring goes I agree with HTSU. It's really not a big deal.

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

Re: How many Credit cards are too many??

ficonightmare — Wed, 17 Nov 2010 16:24:06 GMT

All excellent points.

I'm one of those that can't juggle more than 2 CC balances a month.

Re: How many Credit cards are too many??

Anonymous — Wed, 17 Nov 2010 16:52:42 GMT

I have five credit cards and that is all I need. Any more and I would probably forget about what I used when.

Some people who have 20+ accounts either set up autopay for all of them and have a big bank account to back it up or sooner or later they'll just forget to make a payment on time (unless the cards are all sockdrawered which in my view isn't good either).

Re: How many Credit cards are too many??

Anonymous — Wed, 17 Nov 2010 17:51:18 GMT

Thank you haulingthescoreup. Excellent points! I do have 5 credit cards but 3 of them don't have reward. I'm not sure if i should keep those or close and open another good reward cards.

Re: How many Credit cards are too many??

haulingthescoreup — Wed, 17 Nov 2010 21:20:32 GMT

@Anonymous wrote:

Thank you haulingthescoreup. Excellent points! I do have 5 credit cards but 3 of them don't have reward. I'm not sure if i should keep those or close and open another good reward cards.

Sounds like you might be moving into the fine-tuning phase of credit. Call it aggressive credit-gardening. Credit-landscaping??

I don't know where your FICO scores are right now, but ideally you'll wait until they're at and above 720 in order to get the best deals on new cards. Think about what plans you have for your personal finances and where credit might fit into that, whether it's rewards cards, establishing a relationship with a new bank, or maybe doing nothing at all for now, because maybe you're looking for a mortgage next spring.

When you have some idea of where you want to be, you might want to start a list of possible cards, noting the positives and negatives of each, and the general requirements to qualify. Think about the rewards that actually work for you. For instance, if you don't fly very often, there's nothing terribly special about the Chase Southwest Airlines card, although I understand it's supposed to be pretty good. If you're a subway strap-hanger, a gas card might not be very interesting. And so forth. Keep the list going for a while, several months at least. You'd be surprised how a card that looked perfect early on can lose its luster once you learn a bit more.

If any of your cards have fees, they're definite candidates IMO for closure. No point in paying the CCC's; let them pay you. If one card is a lot older than the others, and doesn't have a fee, that's worth hanging on to also. Even though the closed cards stay on your reports for 10 years (usually; watch out for Equifax) and they contribute to your AAoA, one day they will probably fall off, and you might be kicking yourself. Otherwise, you might judiciously replace them, one at a time.

One thing to definitely consider is what will happen to your AAoA if you up and get 3 new cards. You don't want to drop this figure down to the next lowest year, going from 5 years to 4, for instance. You can lose a lot of points if it drops far enough, and it's pretty painful waiting for it to get back up there. But depending on where you are in your development of personal credit, this might be a necessary price to pay.

Just do a lot of reading on CC's and Understanding FICO Scoring to get a feel for the pluses and minuses.

edit: cna't splel

Re: How many Credit cards are too many??

Anonymous — Fri, 19 Nov 2010 15:39:41 GMT

@ayanhein: I think it would hurt more to close accounts, especially if they have been open for a long time.

Re: How many Credit cards are too many??

MarineVietVet — Fri, 19 Nov 2010 15:45:48 GMT

@Anonymous wrote:
@Anonymous: I think it would hurt more to close accounts, especially if they have been open for a long time.

Short term it doesn't hurt your score at all if the CC accounts have a zero balance when closed. Here is an excellent thread discussing Closing Credit Cards .

Re: How many Credit cards are too many??

Anonymous — Fri, 19 Nov 2010 19:22:44 GMT

@MarineVietVet wrote:
@Anonymous wrote:
@Anonymous: I think it would hurt more to close accounts, especially if they have been open for a long time.
Short term it doesn't hurt your score at all if the CC accounts have a zero balance when closed. Here is an excellent thread discussing Closing Credit Cards .

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

What if my credit card account was closed by the bank because i never use it since day one. But i used it during the time they are closing and have some balance on it. Can i just pay it off? or does it consider as balanced with closed account?

Re: How many Credit cards are too many??

MarineVietVet — Fri, 19 Nov 2010 19:53:32 GMT

@Anonymous wrote:

@MarineVietVet wrote:
What if my credit card account was closed by the bank because i never use it since day one. But i used it during the time they are closing and have some balance on it. Can i just pay it off? or does it consider as balanced with closed account?

It doesn't matter who closed it. And I would always advise paying any CC balance in full as soon as possible.

Re: How many Credit cards are too many??

Anonymous — Fri, 19 Nov 2010 21:49:19 GMT

Thank you. I'll pay if off ASAP.

Re: How many Credit cards are too many??

Anonymous — Tue, 23 Nov 2010 17:00:55 GMT

To me, 2 is already too much. If one feels the need to get more credit, then one should reconsider his way of living for instance to avoid some expenses (although I totally agree that you need a credit to buy a house or a car). I've always stopped myself from getting new CC because I don't want to end up with a wallet full of credit cards!

Re: How many Credit cards are too many??

haulingthescoreup — Sat, 20 Nov 2010 19:15:58 GMT

@Anonymous wrote:
To me, 2 is already too much. If one feels the need to get more credit, then one should reconsider his way of living for instance to avoid some expenses (although I totally agree that you need a credit to buy a house or a car). I've always stopped myself from getting new CC because I don't want to end up with a wallet full of green credit cards!

Getting additional credit tradelines (like CC's) doesn't automatically mean that someone needs to charge things because they're hurting for cash. It's often part of a strategy to maximize credit profiles.

For instance, we often get posts on the Mortgages board that someone only has one card, and their mortgage lender advises them to get one or two more. But getting new credit right before signing for a new home can be tough on scores. Showing the ability to manage --not mis-manage --revolving credit can be important for such high-stakes areas as getting a mortgage.

I use my cards for literally everything other than the laundromat and the collection plate at church, but I pay them off every month. For many of us here on the forums, as well for the public in general, they're there for rewards and convenience and record-keeping and buyer protection, not to maintain an unsustainable lifestyle.

Re: How many Credit cards are too many??

MarineVietVet — Sat, 20 Nov 2010 19:16:11 GMT

I will only add to what HTSU wrote by saying that credit does not automatically equal debt. But it takes self discipline and education to avoid available credit from becoming a possible problem.

Re: How many Credit cards are too many??

mross1080 — Sat, 20 Nov 2010 23:19:10 GMT

I have about 20 cards between bank and store cards. Its a fun challange but I think the key is it doesnt matter how many cards you have its how many balances you have. I cant have more than 5 at one time have a balance otherwise it gets to tough. If I hit 5 cards with balances I wont use another card till I PIF one. Then I just rotate them. Its actually kind of fun. Christmas should be interesting with all the stores im going to go into ill probably hit about 10 cards with balances and then PIF mostly all right after christmas.

Re: How many Credit cards are too many??

creditchild — Sun, 21 Nov 2010 01:43:31 GMT

hi mross,did you ever receive your barclays card,and if so did you request

the cli like we talked about? i just received mine today and i'm going to

call on monday and see would they increase mine, i just pulled myfico tu

today and my score increase to 671! i'm trying to find a card with a decent

limit. i have 4 cards, all with $500cl. so i'm hoping they raise it.

Re: How many Credit cards are too many??

vanillabean — Sun, 21 Nov 2010 05:00:47 GMT

DW and I have a total of seven credit card accounts. We use the three cashback whenever we can get at least 3%, while the four travel cards take the rest, aimed at the upcoming summer vacation.

Seven accounts are for us about the right balance between the benefits they provide and my management of them. They are all set up for automatic payment in full; I'd rather starve than pay interest on them.

Although my favorite motto is "money saved is money earned", I'm neither a saver nor a spender. More like a minimalist, although I also value not having all my eggs in one basket.

The weakest side of our score profiles is new credit. It's also one of the most temporary. Next year should look comfortable all around.

Re: How many Credit cards are too many??

mross1080 — Sun, 21 Nov 2010 05:01:34 GMT

@creditchild wrote:
hi mross,did you ever receive your barclays card,and if so did you request
the cli like we talked about? i just received mine today and i'm going to
call on monday and see would they increase mine, i just pulled myfico tu
today and my score increase to 671! i'm trying to find a card with a decent
limit. i have 4 cards, all with $500cl. so i'm hoping they raise it.

Yes I actually got it today. When I called to activate it I asked but it was a call center and they told me I would have to wait 6 months. Im going to call the backdoor number on monday. I think ill have better luck. I do think it helps if you have cards with higher limits.