Too many credit cards? aka "The Credit Card thread"

robfosters

robfosters

robfosters

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I’ve been recovering a poor credit record over the past few few years. I’ve gradually built up a collection of cards with improving rates each time, and I now have a prime card.

I now have about 8 cards. Now I actually have a decent card, is it worth me binning off some of the credit builders with silly rates or keeping them so my available credit stays up and my utilisation remains low? Can you have too many credit cards? Most of them will never be used again. Grateful for any guidance from you finance savvy bunch.
 
robfosters said:
is it worth me binning off some of the credit builders with silly rates
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Yes. Bin all your credit cards except the one with the lowest rate.

robfosters said:
or keeping them so my available credit stays up and my utilisation remains low?
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No.

robfosters said:
Can you have too many credit cards?
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Yes.

I had bad credit for a few years. So bad, I couldn't get a fresh consolidation loan.

After much struggle I finally paid off my debts, got my credit cards down to one, reduced the limit from $5,000 to $500 and never looked back. Now my credit rating is in the top tier.
 
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I would close some of those accounts purely from a security/fraud/management perspective and just keep a couple of them going.



You don't need to have more than one or two to improve your credit rating.
 
godinman said:
Credit Karma keeps telling me to take out more credit cards, so a bit of conflicting advice there...
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TBH I'm not sure there's an ideal number as such.

Just on a practical level I'd ditch some as the more cards the more chance of fraud.

Maybe it's only a bad thing if you apply for many in a short period of time, actually having that many is not, in itself, bad.

But yeah, fraud would be the main thing for me. I mean who hasn't had to have replacement cards at some point?
 
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On Credit Karma it says to get the best credit score from using credit cards is to have >£16,000 of combined credit limit, it doesn't mention anything about having too many cards

Also using >25% of your available credit is bad, so it could possibly work against you if you ditch too much available credit
 
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BUDFORCE said:
I would close some of those accounts purely from a security/fraud/management perspective and just keep a couple of them going.


You don't need to have more than one or two to improve your credit rating.
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I got down to one a few years back after finally clearing 4 and a consolidation loan. I think the same, one or two would be fine. At least if one doesn't work you have a second as a backup.
 
Sankari said:
Yes. Bin all your credit cards except the one with the lowest rate.



No.



Yes.

I had bad credit for a few years. So bad, I couldn't get a fresh consolidation loan.

After much struggle I finally paid off my debts, got my credit cards down to one, reduced the limit from $5,000 to $500 and never looked back. Now my credit rating is in the top tier.
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If you're worrying about rates you are doing credit cards totally wrong.
 
adidan said:
I think you can look more of a risk with too many open lines of credit.

I'd ditch at least five of them myself (especially if you're not using them)
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I'd agree with this. Credit is definitely a funny thing, lenders don't like if you have lots of credit but aren't using it, the same as utilising too much credit regularly.

I'd certainly say having too many credit accounts - especially those no longer in use is not a great idea - from a security/fraudulent point of view.

Frankly once your credit "score" gets upto good, then it barely changes by opening accounts, or spending credit. You'll only see it drop once you miss a payment.
 
dLockers said:
If you're worrying about rates you are doing credit cards totally wrong.
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But the situation presented to us is someone who's already doing credit cards wrong, and asking for advice on how to do better. In the short term reducing his cards to the one with the lowest rate will be beneficial.

I agree that best practice is to pay off the card at the end of the month to avoid interest, which makes the issue of rates somewhat moot. But not everyone is in a position to do that.
 
Sankari said:
But the situation presented to us is someone who's already doing credit cards wrong, and asking for advice on how to do better. In the short term reducing his cards to the one with the lowest rate will be beneficial.

I agree that best practice is to pay off the card at the end of the month to avoid interest, which makes the issue of rates somewhat moot. But not everyone is in a position to do that.
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I'd argue doing better (setting aside assumptions about outstanding balances) would be the one that most incentivises good behaviour e.g. Barclaycard cashback.
 
Sankari said:
But the situation presented to us is someone who's already doing credit cards wrong, and asking for advice on how to do better. In the short term reducing his cards to the one with the lowest rate will be beneficial.

I agree that best practice is to pay off the card at the end of the month to avoid interest, which makes the issue of rates somewhat moot. But not everyone is in a position to do that.
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In what way am I doing credit cards wrong?
 
Traditional wisdom is that

1 - don't bin the oldest card. This is to do with showing a long history of credit
2 - having lots of cards doesn't hurt your credit score, in fact, if you have a lot of credit, but the utilisation is low, it's a good thing.

I have never actually cancelled a card, I do "swap products" from the same company. I have got a few in the past purely for 0% interest to buy large items and spread out the payments, or for sign-up bonuses.

Of course, it requires good discipline and not max out your credits, which would be suicidal. The key is to pay off the balance every month, how many cards you have doesn't matter.

To "do" credit cards correctly is to pay it off every month, and use cards with bonuses such as air miles, cashback, Amex points etc. Then it cost you nothing to use the card, but accumulate something in return, with protection. The minute you don't pay it off, you are paying for the service, often in an expensive way. It has taken me a while to realise it, i used to have the mindset that the interest is just a "fee" that i have to pay to borrow money. But it is a very expensive fee, and I can totally can not pay that with a little discipline yet get all the perks of using the card.
 
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