How many credit cards is 2 much?

[TERRCO]

In the past year my wife has asked me to build her a new home.My responce was she first needed to pay off her 20 some odd credit cards.I was paying over $2000 in payments a month and getting nowhere.I told her to pay off 1 or more a month till we paid them all.We are down to 3 accounts with balances.I was at the bank talking to a friend who is a loan officer and asked her how many cards was good or bad.She told me that no more than 3 major cards would keep my credit rating at its highest.She said department store cards were not that good for your credit rating.Only VISA,MC,AE Discover ect......So I started cancelling a few cards and I got the exact opposite argument from the cards I was cancelling.They said the more accounts you have with no balance the better for your rating.So which is it?

[737tdi]

TERRCO: I'm no financial expert, but heres my opinion. The 3 credit agencies use a very complicated formula to extract your credit score. I think what will kill your score worse then anything (other then no/late payments) is excessive available credit, not so much the number of cards/accounts but how much credit you can put on each card. I think your right on the money with no more then 2 or 3. Also when you cancel those cards make sure you tell the company to indicate closed by customer request, if you don't it can be a negative to the bean counters. Hope this helps.

737tdi

[BuilderBob]

My advice,
Do not consult anyone with 20 credit cards, regarding, about sound financial well being.
3 credit cards is likely more than 1 too many.

If you owe on 10 credit cards, you have more to worry about than what will happen if you cancel a credit card.

What is your current credit rating?
If you don't know, find out?

[drcampbell]

Naturally, a bank will naturally tell you department store cards are no good - banks don't collect 3% off the top of every purchase made with a store card. Me, I figure that if I'm going to use a card at all, I definitely prefer using the store's own card because the moneychangers aren't skimming a percentage from my cash out of pocket. Of course, I'd say the opposite if I owned a bank and was on the receiving end of interest & fees.

I'm not a certified financial planner but I can do the math. In your situation, it sounds like the number of cards is the least of your worries - it's the pattern of spending and paying.

Also remember that your credit score isn't really measuring either your worth as a human being, your net wealth or your ability to pay, but your viability as a cash cow for the credit industry. A cautious money manager who always pays bills on time, incurring no late fees or interest, will have a lower score. And the past year or so, creditors are putting less emphasis on the credit "score" and more emphasis on the fundamentals.

Sounds like the first thing you need to do is write down your existing household budget, making sure interest is a discrete line item. Annualize each one so you're comparing apples to apples. Then come to a consensus about what your priorities are. I'm guessing that continuing to pay almost $24,000/year in card interest isn't one of them.

Only then, talk to an actual loan originator (not a broker), preferably someone who is not a friend, and do so on the record. It's probably worth the $100 application fee to make a formal application and see what the formal response is. Better yet, two - one at a bank and one at a credit union.

[bekair]

Rule #1 - NEVER spend more than you earn.

Rule #2 - If you DO spend more than you earn - refer to Rule #1.

Simple.

BBT

[SmokeyWren]

Originally Posted by bekair

Rule #1 - NEVER spend more than you earn.

Rule #2 - If you DO spend more than you earn - refer to Rule #1.

Two exceptions:

1] Your first home can have a mortgage payment. After that, never increase the amount of that mortgage, and never increase the years until it will be paid off. If your job forces you to sell out and move, don't have more unpaid mortgage in the new home than you paid off on the old home.

2] When you first graduate from college, you'll need a decent vehicle to get to work. So buy a basic econo model and charge it. No, not a BMW until you can pay cash for it. If you've been out in the real world for more than 10 years, if you can't pay cash for your new wheels, you can't afford the new wheels. So continue to drive the old jaloppy until you save enough to buy the new wheels.

Two credit cards are all you need. One from a bank and one from a Credit Union, maybe one of them a VISA and the other one a MasterCard or other major credit card. But pay them both off every month, without exception. So the credit cards are almost the same as paying cash.

You can have all the debit cards you want to tote around. We have two - one for me and one for Sweetheart. And since the debits come out of your checking account immediately, it's the same as paying cash.

When you get old, you'll be glad you didn't live "over your head", but either paid cash or did without.

[roofeditor]

Originally Posted by SmokeyWren

Two exceptions:

1] Your first home can have a mortgage payment. After that, never increase the amount of that mortgage, and never increase the years until it will be paid off. If your job forces you to sell out and move, don't have more unpaid mortgage in the new home than you paid off on the old home.

2] When you first graduate from college, you'll need a decent vehicle to get to work. So buy a basic econo model and charge it. No, not a BMW until you can pay cash for it. If you've been out in the real world for more than 10 years, if you can't pay cash for your new wheels, you can't afford the new wheels. So continue to drive the old jaloppy until you save enough to buy the new wheels.

Two credit cards are all you need. One from a bank and one from a Credit Union, maybe one of them a VISA and the other one a MasterCard or other major credit card. But pay them both off every month, without exception. So the credit cards are almost the same as paying cash.

You can have all the debit cards you want to tote around. We have two - one for me and one for Sweetheart. And since the debits come out of your checking account immediately, it's the same as paying cash.

When you get old, you'll be glad you didn't live "over your head", but either paid cash or did without.

There are situations where you could leverage your home to use the cash for something very profitable. Not a new truck.

I've used a large credit line on my home to finance many profitable things. For instance one day after hurricanes Frances and Jeanne I took 500 against the home and used it to buy construction materials in Atlanta and Missouri which were shipped to Florida and sold for 200 profit in less than 2 weeks. I also bought to hurricane ravaged homes for next to dirt and didn't have to bother with a long loan process at the bank which would have missed the deal.

But generally the guy that is punching a clock for 50K a year would be best advised to avoid speculating on things. He will however still be punching the clock when he's an old man!

[MarvinVR]

Dude, Im a 28 year mortgage broker and see hundreds of credit reports each year.

The highest scores I see are on people with FIVE open accounts but balances on ONLY THREE. Id close all your cards but 4 at the most. Keep you balances on two or three at UNDER 50% of their max allowed.

Part of the factoring in the horribly FLAWED score system is to consider your maximum possible debts, and the more cards you have the mosr possible debts. By the way, all people are allowd one free credit report each 6 months without having the inquiry harm your score. Its only from ONE website though---stay away from places like myfico dot com and freecreditreport dot com etc.

[greenskeeper79]

# of credit cards > 1 = too many

[tates97]

Credit is nothng but money owed X time delayed. If I can't pay cash or pay it off in thirty days I'm not gonna get it. Emergencies(blown motor...)Napa store credit(I live in a small town) or go without till I can work extra enough to fix it. I lost a lotta sleep and time getting here. MY .02? Cut every card up and dig in learn figure out needs vs wants. I'm nt saying do it but look into the philosophy of Consumer Credit Counseling its a non profit repayment program. TAter

[Dave Haven]

The only reason I have a VISA card is for the few places that don't take Discover.
I never carry a balance on either one. I only use them for the convenience. I don't have to carry much cash or write many checks..

[TERRCO]

Thanks for all your replies.According to my wife my credit score has gone from 790's to 720's since we started from 3 cards to 25 cards.This is over a 3 year period.I have never made any late payments or given them reason to frown at me.I have 3 accounts left with balances and hopefully by August they will be gone.I will start cancelling cards soon and hopefully only have around 4 cards left,VISA,MC,Home Depot and Lowes commercial accounts.I need the Home Depot and Lowes for my business.I will check my credit score again soon.It has been around 7 months since I checked it and I'll bet it has gone down some more.I called my friend to clarify and she said it is harder to get credit from VISA,MC,AE ect. than from department stores because they are not trying to sell you anything.A department store benfits from you having an account with them.At least this is her explanation.

[roofeditor]

Originally Posted by TERRCO

Thanks for all your replies.According to my wife my credit score has gone from 790's to 720's since we started from 3 cards to 25 cards.This is over a 3 year period.I have never made any late payments or given them reason to frown at me.I have 3 accounts left with balances and hopefully by August they will be gone.I will start canceling cards soon and hopefully only have around 4 cards left,VISA,MC,Home Depot and Lowes commercial accounts.I need the Home Depot and Lowes for my business.I will check my credit score again soon.It has been around 7 months since I checked it and I'll bet it has gone down some more.I called my friend to clarify and she said it is harder to get credit from VISA,MC,AE ect. than from department stores because they are not trying to sell you anything.A department store benefits from you having an account with them.At least this is her explanation.

Is not the end all. For instance my wifes score is about 800 and mine is about 750. How can that be, I make 20 times more than she does? Well simple, we own 9 income properties 5 of which have mortgages and they are all in my name not hers so I'm technically carrying a bunch of debt and she is not.

We do have an American Express Centurion Card and it does have some pretty cool benefits, BUT there are many places that don't accept it including my local Harley Dealer!!!! I think we only have the AMEX, a Southwest Visa, a Debit card this is also a MC, and a JP Morgan Chase card that is really a home loan line of credit. I have never used Discover! So really we only have 2 cards.

[SteveRacer]

Kind of reminds me of:

Definition of polygamy : man that has too many wives.

Definition of monagamy: man that has too many wives.


Seriously, I don't think it matters how many credit cards you have if you don't revolve the balance. And if you're not revolving balances, why not lighten your wallet?

-steve