Somehow I’ve wound up with about 9 credit cards. The thing is I don’t owe much on any of them (nothing on a couple) and I always pay off my balances quickly on all of them. I only use them for ordering online and occasionally as a buffer for big-ticket items.
So is this helping or hurting my credit rating? Would it be a good idea to close a few of them, or does it not matter as long as I don’t ever run up a big balance?
I’d say close out the ones you don’t owe anything on.
It will only matter when you try to get something like a loan, where they check to see how much available credit you have open.
NO! While opening extra credit accounts can harm your credit rating, closing them out does nothing to help. In fact, reducing your total amount of credit available can harm your credit rating even further. It’s a no-win situation, in a way, but the best thing you can do is stand pat. Just make sure those balances stay low, and keep paying on time.
Well, if what nametag says is true, then run all of them up to the limit on purchases of small items with high resale value like jewelry, and on your last card, by yourself a one way ticket to Rio. Be sure to not leave a forwarding address.
If the Credit Reporting Agencies are going to lock people in a catch-22 like that, maybe more people should take advange of being in a “multiple credit card accounts makes someone a credit risk” situation.
Credit rating formulas are not public knowledge - in fact they are considered trade secrets. Also, you can get a different credit score depending on what type of company is asking - a mortage lender has different interests than a revolving creditor.
In general terms, the total amount of credit available to you is not nearly as important as the total amount of credit that has been extended to you, and neither are as important as your payment history.
That being said, I would not encourage anyone to open nine revolving accounts. Still, you sound pretty credit worthy and I doubt you’d have much trouble with most financing or rates for which you’d otherwise be eligible.
The scary thing about this is that you don’t really have control on the credit they extend you. I have six credit cards and all but two of them constantly raise my available credit line. One is up to $25,000 !!! :eek:
I suppose I could probably call them and have them lower my limit, but that would kill my dreams of doing precisely what SC_Wolf suggested!
Count yourself lucky that you don’t live in Ireland, where, since the last budget, there is a €40 ($40 approx.) tax per card per year. Oh well, at least the price of a pint didn’t go up 
Philly
I’ll go with the “keep 'em” crowd – I’m in a similar situation (ok, I’m only up to eight and not shopping for more), with no real balances – one for big-ticket items I may take one to three months to pay completely, and one I use daily for life and paid monthly (wouldn’t need cash at all were it not for coffee at work and some stupid places that don’t take cards). Last time I checked my FICO score I was amazed it was so high (modest house, modest job). Maybe the magic was having absolutely no late pays, but using only 7% of my available credit (not counting mortgages and auto loan) seemed to go a long way, too. It’s even possible the day-to-day card doesn’t report a balance (depending on reporting and balance dates).
Interesting thread. I have only two cards - a credit card and a debit card. The credit card has a limit that keeps going up (went up another £3,000 this year) despite the fact that I have next to nothing on it. I use the debit card for everything. Since it is linked to my current account, the amount is paid immediately. I use it to get cash from ATMs as well. I only use my chequebook to pay my credit card bill and for any bill that I can’t pay with my debit card.
I only use the credit card for big ticket items (e.g. air tickets) or when I want to take advantage of the insurance cover. Otherwise, I always pay with my debit card.
Like Balthisar, I could almost do without any cash at all. The idea of having eight or nine cards is startling, to say the least!
I am not an expert on credit ratings, but the only time that I have heard that having a lot of credit cards was detrimental (other than when someone maxes them all out and gets in debt) was when I looked into my chances for getting a house; according to literature that I read about the subject, one factor that lenders may look at is the amount of “potential debt” that the cards represent, regardless of the balance that you maintain on them. If you have 9 cards and the total “potential debt” for all 9 adds up to some major numbers, it could become a negative factor when you’re trying to secure a home loan. The idea is that you could get the loan and then go out the next day and max out all of your cards, and then your income to debt ratio would be less favorable.
I’m not sure if that is the case for all mortgage lenders or not, or if that also applies to other situations.
I have 10 “regular” cards (MasterCard, Visa, AmEx) and several “proprietary” cards (can only be used at the issuing company, e.g. gas station cards). I have bought a house and a couple of cars, and have never been asked how many cards I have. All they were interested in was where I worked, and how much I made.
Of course, I make sure that the balances are always paid in full, and on time. On most cards, I have arranged that they be paid automatically, in full, on the due date by direct withdrawal from my bank account. So I treat credit purchases the same as check payments - if the money’s not in the account to pay for the purchase, I don’t buy it.
Why so many cards? Some give me bonuses like airline miles, some give discounts or “cash back” refunds, some give me purchase insurance or extended warranties, some give me damage waiver insurance on car rentals. Some bill to my office, so my wife can’t see what I bought her for Christmas! Most important, none of them charge any annual fee.
resident credit bureau guru here: Doesn’t matter how many, as long as you have a few of them, instead of none.
What does matter: it’s benefits almost every score to carry balances for a while and pay them off, rather than paying them off and never carrying a balance for a period of time.
Philster, you’re always super great at being the resident credit bureau here!
I’d mentioned that I have a day-to-day credit card that I pay off monthly – but, also depending on when I pay the bill and when the company reports to the bureaus, it’s possible that I do show a balance every month, right? Therefore I’m in compliance with your having said "carry balances for a while, right??
Also, I used the CC instead of the debit card exclusively, because I don’t have to worry about having the money in the bank to cover it, i.e., I don’t have to worry about “is there enough.” Granted the CC company doesn’t get any interest off me from this card, but they do get all of their merchant commissions. So in their eyes, am I not a good customer? And if not, why does my bank pester me all the time to use my Visa debit card? There’s no interest – it’s from checking. I can only imagine that there’s a significant amount to be earned from those commissions. If we say 2.5% on average, that’s often more than $25 a month from me!