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

[robfosters]

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]

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.

In what way am I doing credit cards wrong?

 

[robfosters]

It's a fair assumption that someone who makes a thread like this has outstanding credit card debt.

This is a pretty poor use of credit cards as they are astronomically expensive compared to 1) not borrowing at all, 2) taking a loan if it's an expense that really cannot wait.

The right way to use credit cards is to spend on them regularly, clear them in full, maximize any perks (AMEX 1% cash back / Barclaycard 0.7% cash back + regular spending offers like 10% off of Morrisons etc).

Do you keep any balances on your cards Rob or are you clearing them each month?

I pay them off every month. I normally put a sub or two on one like my Netflix or Spotify sub and pay them off so they’re constantly being used. The only reason I got in trouble years ago was through illness

 

[robfosters]

Yeah you are doing the right thing that. What is your "prime" card? Are you getting any benefit for having it? If not, put it aside and get a BarclayCard Rewards card. At least it'll give you a bit of cashback.

Barclays won’t give me a prime card yet. The card I’ve just got is the Tesco bank low APR card. Doesn’t have any benefits other than a low APR. But I don’t think those cards usually do have any extra benefits. Oh, I get club card points when using it.

 

[robfosters]

Why do people seem to like bragging about not having a credit card? It’s not really a flex is it.

 

[robfosters]

I’m not just building my credit record to get better credit cards, it’s other things too. For example, I’ve found 0% 12 month BNPL plans can be tricky to get without a very good credit record. Supposing something big like my TV breaks, it’s nice to have the option just to be able to replace it without any problems. We can’t all afford £1500 or more in one hit.

 

[robfosters]

Wish I was in the top 1% of credit card users like you, it is actually an honour to be speaking to you. I'm only in the top 1% of earners myself.

Well then you should be using a credit card to buy your Gucci belts for the added safety.

 

[robfosters]

I’d like the Nectar card Amex as I shop in Sainsburys, but my approval likelihood is low, and I don’t want to damage my score with a failed application

 

[robfosters]

How the hell do people manage to get through life with a negative bank balance? Doesn't this keep you awake at night with worry?

Overdraft. I have one but do not even think about touching it

 

[robfosters]

In my view credit cards are only useful if you are borrowing on them and paying it back in a reasonable time.

The only reason I use a credit card is for online purchases as it generally has more protection.

I'm not sure why someone would need 8 credit cards at the same time unless your debt was getting out of control?

My debt is nowhere near out of control. 6 of them are never used.

 

[robfosters]

Credit cards are great.

I always try and have a new card with a sign up bonus on the go, it usually ends up giving me at least a 10% return on spend I'd have to make anyway.

Honest question, has it affected your credit score having all those?

 

[robfosters]

They need to know that you are responsible with credit, how much you own in possession is not really the criteria. As the debt on credit cards are not the same as a mortgage for a house. What's the term...i forgot. Oh yes, Unsecured and Secured loans. Credit card is unsecured, so it's harder for them to get it back, vs a secured loan.

The only way really to improve your credit score is actually use credit, since having a million quid in the bank doesn't show them how you would do when given credit, are you going to just do a runner?

I too are near the end of my mortgage and too have 5 digits in savings, i have no car repayments, i buy nothing with any kind of repayment plan. Even though i see lots of "spread your purchase in 3 payments with 0%". I just pay it off.

Think of it as buying THROUGH credit card, rather than buying WITH credit.

I sometimes use the 3 month option with my Monzo flex. Cracking little idea is flex, especially with the new pay in full at the end of the month option.

 

[robfosters]

One thing I’ve noticed over the last year is even the prime cards rates are getting pushed up now. The likes of Barclaycard are going up to nearly 24%. I presume this is all to do with the constant rise in interest rates that the BofE is forcing upon us?

 

[robfosters]

Most likely, but I never care about that. One of mine is 73.9%* but it's irrelevant as it's settled monthly.

As I said before, I buy things THROUGH credit cards, I don't really need the credit.

*Amex Gold, I have this because I like the global lounge access. Which I use, so I get value from it.

Is the lounge access for BA lounges only and can you fly any class or do you have to be in club or first only?

 

[robfosters]

Basically, it's priority pass membership. You can fly any class.

Not every airport has it though, for example, T2 in Healthrow doesn't have it. Or they used to, but then the lounge left the programme.

Join Airport Lounge Access Membership | Priority Pass

Join Priority Pass, the largest airport lounge access with 1400+ lounges worldwide. More in-airport benefits.

www.prioritypass.com

But not the basic one, where it would cost entry fee each time you enter. I get to visit it for free.

So if you get unlimited access to lounges, it’s pretty much equivalent to the £419 prestige level membership

 

[robfosters]

I deffo have a million of debt if you count actual debt + potential debt lol.

There was a lad that exploited a Clubcard trick with a Tesco Credit Card. Think he bought a grands worth of beans and with points stack/swaps/loyalty offers he managed to get like 4 biz class flights to Aus.

After a grands worth of beans he should have been able to propel himself anywhere anyway!

 

[robfosters]

It's so close it just needs to tick over by 1 more and it's there!

Surely you get pre-approved and accepted for everything with that score?

 

[robfosters]

Does anyone know if Monzo flex is included as part of your credit limit on your file

 

[robfosters]

Yeah it does have the caveat "as long as its all true"

Same as you, never been rejected for a pre-approved card

 

[robfosters]

I know people say you need a credit history to get a card, but I honestly can vividly remember that back in 1998, when I turned 18, it was barely two weeks before I got the old style you’ve been pre approved letters from Capital one.

At the time it was cool, but now you look back and you think how immoral it is that the company just couldn’t wait to drag youngsters into debt.