How many Credit cards are too many??

[ayanhein]

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?

[ficonightmare]

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

[haulingthescoreup]

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.

[MarineVietVet]

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".

[ficonightmare]

All excellent points.

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

[wollepopolle]

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).

[ayanhein]

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.

[haulingthescoreup]

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@ayanhein 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.  

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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

[superdeluxe]

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

[MarineVietVet]

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@superdeluxe wrote:

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

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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".