Comments on: I Have A Wallet Full Of Credit Cards – Which Ones Should I Keep?

By: Elana

Elana — Tue, 29 Jan 2008 10:22:31 +0000

I used to have more than 10 credit cards from various issuers.

I trimmed down to only a few recently, terminating those I almost never used in the past 6 months.

Now I’ve only 3 active cards:-

1)Online purchase/paypal. I am using a classic credit card with low credit limit to avoid fraud on purpose. This is to void the crooks who love to steal credit cards with high credit limit.

2)Gas/Monthly Bills. Again, I sued a low credit limit card to avoid fraud at the pump.

3)Shopping. I use Platinum card for big purchase. plus I love this card issuer as I ‘ve a AAA credit ratings with them.

By: chris

chris — Mon, 07 Jan 2008 07:21:22 +0000

stupid question, but i have a discover card and they sent another pre approved application but it looks like its for the same credit card. Can i have 2 cards from disover?

By: Credit

Credit — Tue, 11 Dec 2007 02:53:07 +0000

It is not logical, but FICO appears to reward people for having many cards ~5-10 with high limits. Canceling cards or lowering limits will most likely reduce your FICO score. If you have a perfect and long history, this is not a problem, but if you are on the border of the prime territory as many people are, a few points lost could be a very costly mistake. At the same time, it is not good to go out and apply for credit before you are shopping for a mortgage. Since it is a risk model and not a human, it may reward behavior that contradicts what your loan officer suggested.

By: Jen

Jen — Tue, 11 Dec 2007 01:59:00 +0000

Along the lines of keeping a thin wallet…I like a thin wallet and a light key chain and most stores have “saver cards” and/or key chain tags now. Instead of filling up my credit card slots or weighing down my keys, I cut out an index card and tape the tags to it. I can fit 4-6 on a card, it works great, and I only use one credit card slot.

By: pam

pam — Tue, 11 Dec 2007 00:28:23 +0000

Trent – the advise from your loan officer was in regards to mortgage underwriting. It has no relationship to your credit report.

By: Lauren

Lauren — Mon, 10 Dec 2007 23:37:29 +0000

Shortly after I turned 18 I opened two cards– one with Wells Fargo and one with Citi. Wells Fargo was very inflexible and gave me a much lower limit so I canceled it and have dealt mostly with Citi since then. My favorite thing about Citi is that they have always been willing to lower my interest rate when I call and will convert my exisitng account to other card types. This allows me to keep the same account number (and thus the same account history) while getting the best bonuses possible. Right now my account is under the Upromise program which lets me earn $ toward paying my Sallie Mae Stafford loans. The Upromise card also works to build savings for a child’s college fund.

I also have the Amazon Visa and a Discover Card for various rewards purposes, but none carry balances. I only have two open store accounts and I pay them off immediately after I use them. I am only 21 now but my credit is so good that American Express approved me for a $5,400 limit on a student’s income. I could do some serious damage between all these cards but I am very careful with them. My strategy has been to get a card from each major provider (MasterCard, Visa, Discover, AMEX) to test drive the customer experience. Visa and Discover have never done me wrong, but my Citi MasterCard has been my favorite so far.

By: Trent

Trent — Mon, 10 Dec 2007 20:00:02 +0000

When I first started hunting for a mortgage, a loan officer pulled my credit report and almost immediately advised me to cancel some of my unused cards or at least get their limit lowered. She directly told me that having a large unsecured credit line looked dangerous to any lender, particularly when that total credit line began to approach our annual household income. Since we wound up with an extremely low 30 year fixed (under 6%), I tend to believe the advice. Even more importantly, not having 20 credit card numbers out there means a much smaller chance that a data slip-up somewhere at the bank will result in my identity being stolen. I can’t conceive at this time why someone would want a wallet full of cards unless they enjoy risk.

By: Karen

Karen — Mon, 10 Dec 2007 19:21:26 +0000

Just wondering, when determining your “oldest card”, does it matter if the bank owner has changed? Both of my oldest cards have been through one or two takeovers – MBNA became Bank of America, for example – sometimes the numbers stayed the same, other times the card was reissued with a new number. I don’t think either of the cards I’ve had the longest are still issued under the same bank they were originally.

By: AndyJ

AndyJ — Mon, 10 Dec 2007 19:02:59 +0000

Trent and all, I used to work for myFICO.com and while most of the advice is sound in this article, i can tell you that cancelling credit cards is simply not as effective as simply keeping the accounts open and cutting up your cards. Credit Scores love the credit utilization ratio – credit usage/credit limits. So the more cards you have that aren’t being used, the higher your credit score. Cancelling cards, especially around the time of looking for a loan, is not a great idea. My score is a 769 and i have a bunch of store cards that i never use that are cut up but the accounts are open.

By: chris

chris — Mon, 10 Dec 2007 18:31:10 +0000

I had 2 cards for awhile, my amazon visa and my credit union atm/check card. This year it’s ballooned to 6 cards for some very good reasons.

I was given 250$ to get a second visa (the freedom card) this card is now sued to get 3% on certain things while the amazon is used for general stuff. I got a best buy mastercard to replace my aging best buy rewardzone card. I got 25$ for free and get double rewards on bestbuy where i generally buy most of my entertainment (amazingly i spent elss this year at best buy then most years). The mastercard is also used at sam’s club where visa is not accepted. And I signed up for an amex card (no fees) for a free 100$ gift card and for the rare opportunities where an amex card comes in handy (i.e the amex wishlist promo).

And finally I now have a second atm/check card from charles schwab.

Not all the cards are kept in my wallet 100% of the time, some are kept in my locked glovebox or at home. I think the system works for me now, but eventually I may consolidate the two visa cards (probably after I accumulate 200 in reward son the freedom)

By: Monica

Monica — Mon, 10 Dec 2007 14:48:11 +0000

I am sort of in the opposite situation to the people who prompted this post. My question is, how many cards is it necessary to have? I only have one, my first credit card which I have had about 10 years. It is a MasterCard, it is accepted everywhere, it has no annual fee, it gets me Air Miles, and I don’t care about the interest rate because I pay the balance in full every month. Should I have more credit cards in order to positively affect my credit rating? If so, how many?

By: LexNaturalis

LexNaturalis — Sun, 09 Dec 2007 03:30:45 +0000

Re:I love my debt score

You do not need to give your social security number to any utility company. My electric company will allow you to simply pay 1 month’s payment as a security deposit (that’s return after 12 on-time payment) and there’s no credit check. I’ve gotten cell phones and local phone service without a credit check.

Even the bank I got my mortgage through didn’t look at my credit score. They did manual underwriting.

I have a credit card as well as a card that my company gives me, but to insult people who don’t want to use credit is bad form. Especially if you’re going to make universal statements that aren’t necessarily true.

By: Elizabeth

Elizabeth — Sat, 08 Dec 2007 22:06:27 +0000

My husband and I also use the Drivers Edge. I had the student version and finally got them to change my status (and lower the interest rate). I’ve only held a balance past one month once and that was while I was a student and needed to wait on money to pay a school bill. Anyway, I wanted to let Trent know that Drivers Edge points can be converted to ThankYou Points. DH and I are saving for a car now, but we just purchased a washer and dryer. Our converted points paid for several hundred dollars in gift cards.

Anyone know how to close an old used account that is joint. I signed for a card in high school to get credit and my mom co-signed. I can’t get anyone to close the account now. They say we both have to be in the same place (I never even had a physical card to use). Any suggestions?

By: dave d

dave d — Sat, 08 Dec 2007 21:33:02 +0000

unless of course that’s factoring in BT monies, in which case it’s a pretty achievable figure.

By: Anne

Anne — Sat, 08 Dec 2007 18:16:39 +0000

$8500 a year in credit card rewards???!!?? Unless that’s mostly coming from credit card arbitrage and reimbursed business expenses, it looks like a spending problem.

By: Credit

Credit — Sat, 08 Dec 2007 16:17:02 +0000

This advice is contradicted by a large amount of evidence. The problem is that people make logical arguments for why your score should be higher — ratio of your credit limit to your income, etc. Unfortunately, the opposite is true in most cases. The contradictory logical argument is that credit card companies trust you with larger credit limits or more cards with respect to your income, so you are more credit worthy. Since FICO is a risk model, it doesn’t use either type of logic, only real data. Unfortunately, this is where most people go wrong and end up lowering their credit score by following advice posted on this blog. Because you may change scorecards, it is not entirely clear what impact this will have, but anecdotal evidence suggests this is a bad move and having more cards is better. This helps utilization, average age and most likely puts you in a scorecard with a less responsible population, which improves your score. If you want lower insurance rates, mortgage interest rates, etc. keep all cards open, the best evidence suggests that you should use them once every six months.

By: dave d

dave d — Sat, 08 Dec 2007 13:18:04 +0000

I would rather just let my cards expire instead of canceling them – it makes for a longer average for the amount of time I’ve had a card, and this is something CC issuers look at, is it not?

If you don’t use a card, great…don’t use it, but don’t cancel it. Won’t it reflect positively because the average age of your credit cards increases?

Maybe I just have my head up an ‘exit-only’

By: Debbie M

Debbie M — Sat, 08 Dec 2007 04:48:37 +0000

My advice is to keep the oldest card, the one with the best rewards (for stuff you will pay off at the end of the month) and the one with the lowest interest rate (for purchases that will roll over).

My reality is that my oldest card has my best rate and I haven’t used it in years. But then I have been sucked into several rewards cards: one for gas/groceries/drug stores, one for home improvement stores and other things, one to give me free shipping from an online store I like, and, um, two I signed up for because of introductory offers which have now expired but which occasionally return. Crazy. None of them have annual fees, at least.

By: Sarah

Sarah — Sat, 08 Dec 2007 02:29:30 +0000

If you have a card that charges you a fee for nonusage, you should be cancelling that piece of garbage on general principles–it’s obviously offered by a very shady lender who will doubtless be looking to screw you over in other ways. Charging you a fee for *not* lending you money? *Bleep* that noise!

The basic problem here is that one of the FICO factors is percentage of utilization of your current credit limit. Thus, if you have two cards with credit limits of $1000 each, and owe $500, you have a utilization of 25%. Close one card, and the utilization rises to 50%, even though your debt hasn’t changed at all. So you need to be careful about closing accounts if you’re going to get that kind of result. Take the card out of your wallet instead and stick it somewhere safe until you’ve finished paying off your cc debt (that *is* your goal, right?).

By: Kevin

Kevin — Sat, 08 Dec 2007 01:01:59 +0000

A simple way to make sure you keep the cards out of your wallet: get a small wallet.

I bought an “ALL-ETT billfold” about 2 years ago, and I love it. It holds a maximum of 10 cards (of which one is a credit card, and one is an ATM card) along with some cash. I hate “George Costanza” wallets.

I think I have the “European”. It’s been a while.

http://all-ett.com/