Why do people have multiple credit cards?

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Why do people have multiple credit cards?

Postby GabeCR » Tue Oct 15, 2013 7:56 pm

This has been something I've been thinking for a while. I have always been very organized with finances and have not had a credit card the whole time I've lived in the US since 2005. I have built credit though by paying off my student loans ahead of it. So right now I have zero debt of any kind.

Not that the loans are done I am starting to apply for a credit card to continue building credit, but for me one credit card with cash back/travel rewards is all I need.

I am amazed/terrified when I read of people just applying for cards left and right and having 5+ active cards.

Why do people like to do that? I feel like that is just a disaster waiting to happen.

I'm just curious to see what people's opinions are.

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Postby whit » Tue Oct 15, 2013 10:58 pm

lots of reasons.

I have seen credit cards with 100k limit, 300k limit..but this is rare.

these days, people most likely have it in the hundreds, thousands, and max i'd say is around 50k.

gone are the super high credit card limits.

you want to keep the utilization low so your credit score can build.

I helped a lady who was obsessed with getting over 800 in credit score..but never could even though she pays off her cc every month in full..she has a CL of about 40k and she spends about that much (lots of $$$$)

but she only uses it on one cc..her credit score is still high, don't get me wrong..it was about 750-790 depending on when she checks it.

but it would never get any higher because she only wanted to use one cc and wanted to earn miles/points and so she would charge everything.

i guess the short answer would be, to having more then one cc is

--more options (what if one of them got shut down? compromised while you're overseas? etc)
--rotating cashback (diff companies have diff categories, its never gas across board for citi, discover, chase, etc)
--keeping utilization down, CL isn't as high anymore and ideally you'd want to use 10-20%, no more then 30%
--i could go on........but you get the gist

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Postby GabeCR » Tue Oct 15, 2013 11:06 pm

Thanks for the info. I am actually just starting to learn about the credit limit utilization. That would be the only reason I would see logical to use more than one card. In my case I spend very little so I'm sure it wouldn;t be a problem for me, but I can see how people with big families would need a lot more credit options.

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Postby DavidNY » Tue Oct 15, 2013 11:08 pm

GabeCR wrote: for me one credit card with cash back/travel rewards is all I need.

It's tricky since everyone's requirements will differ, but I'd suggest looking at the Bank of America Travel Rewards Visa card. It gives a flat 1.5% cash back for travel on everything purchased (This can be 1.65% cash back if you happen to bank with them). There's no annual fee or foreign transaction fee and it has a handy EMV chip.

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Postby leev18 » Tue Oct 15, 2013 11:53 pm

I only have one credit card and it's for building up my credit. By the time my credit is good enough, I can apply for other credit cards and take advantage of their 0% APR intro offer for big purchases whenever I need to. But, that's just me.

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Postby thom02099 » Tue Oct 15, 2013 11:56 pm

Folks have multiple cards for equally multiple reasons. Cash back rewards, travel rewards, 0% BT, concierge services, variety of benefits, etc. Lots of folks want one of each from the major payment networks: Visa, MasterCard, Discover, American Express. Certain cards come with EMV chips and when used for travel, may have no FTF. Some like to have a store card, such as Home Depot or Lowes, in order to finance major purposes with 0% for XX number of months. There are many other reasons.

I have 17 cards and over $133K in credit limits. Do I use them all? No, I rotate cards for specific purposes. A goodly number of folks with multiple cards do the same thing. I do have some "go to" cards that I use more frequently than others. I also SD some of the cards that are used infrequently. Why do I have them? Well if they don't have an AF, having them is not costing me anything; some of the cards that I use frequently do have an AF. To me, they are worth it.

It just all boils down to what is beneficial for YOU personally. Some folks do well with 1-2 cards. Others have even more cards than I do. It's all a matter of what you are most comfortable with. I have all that I need/want, so now I'll just ask for the periodic CLI. If I get it, fine. If I don't, it's no big deal.
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Postby takeshi » Wed Oct 16, 2013 8:34 am

GabeCR wrote:Why do people have multiple credit cards?

There are many reasons and the reasons can vary from person to person. For me it's a matter of:
  • Maximizing rewards and benefits
  • Diversifying credit card issuers
  • Maximizing credit limits to help maintain low utilization.

No single credit card offers the highest rewards for all of my major spend categories. No single credit card offers all of the benefits I desire. Some cards charge FTF's, some do not. Some offer EMV, some do not. The non-FTF and EMV-equipped cards are used for international travel. Three of my cards offer the versatility of Chase's Ultimate Rewards but the others do not. All three work together to maximize my UR rewards and I would not get the same results with just one of those cards by itself.

Sticking to one card issuer is a risk just as putting all of any eggs into one basket is a risk.

Having higher credit limits is easier with multiple lenders as each lender has its own internal limit on the credit it is willing to offer an individual. I don't "need" the total limits that I have and I certainly don't fully use them as I pay off my balances each month. However, the limits I have allow me to keep my utilization under 10% with my regular monthly spend without having to micromanage my balances. Keeping my utilization under 10% maximizes my credit scoring as utilization plays a significant role in credit scoring.

Also consider that number of accounts does factor into credit scoring. AAoA also plays a part in credit scoring. I have a couple of cards that I do not regularly use but keep open because those cards are some of my oldest revolving accounts with no AF's and low APR's. AmEx backdating also helps with AAoA. I have 2 new AmEx cards opened this year and each of them factors in as a 15 year old account due to backdating.

GabeCR wrote:Why do people like to do that? I feel like that is just a disaster waiting to happen.

Why do you think you can make a broad, sweeping generalization that it's a disaster waiting to happen? Mismanagement is mismanagement. Number of cards is an entirely separate matter. The two can certainly be linked but the number of cards that one can manage responsibly varies from person to person. For one person that may just be 1 card. For the next it may be 5. For the next it may be more.

There are certainly many who do have more cards than they can manage but you can't just assume that anyone with more than 1 card is doomed.

Never assume that your situation, needs, wants, etc are universal no matter what the topic.

GabeCR wrote:I am amazed/terrified when I read of people just applying for cards left and right and having 5+ active cards.

Applying just for the sake of applying is definitely a valid concern but having a certain number of cards doesn't mean anything in and of itself.

All this said, you have to determine what works for you. If that means one revolver then stick with it. However, it seems to me that you might want to read up on credit scoring and look into rewards and benefits and their suitability to you.

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Postby Mrm-na » Wed Oct 16, 2013 9:36 am

I only have 3 cards, and have my eye on 1 more in the near future. Even with that number it's already starting to feel like it will be a burden to deal with them.
But when I plan the next 1-2 years, I expect to end up with about 5-6 cards. Even though in some ways it will be a nuisance to maintain them, and I'll probably have to make artificial efforts to keep any from auto-closing as inactive. Personally, my reasons are:

- I don't want to be overly dependent on one creditor. If one of them gets crazy about something in my credit profile, I want to be able to shrug them off. This is the single biggest reason I'd never be comfortable with only 1-2.

- Separation of personal and business expenses. Actually, that could push me to a high number, but I hope not.

- Different rewards structures. This can easily mushroom the number of cards that one can justify, so I'm trying not to get too crazy with this.

- Some cards have miscellaneous benefits that deter me from closing them. As I eventually get better cards, my 2 oldest cards will become useless. I'd like to clean up the clutter, but one of them gives a free monthly FICO score. Another card might stay open only because of it's age, which makes it helpful for credit scoring.

I've been surprised at the number of cards and constant applications that many people have on credit forums. 10-20 cards would surely drive me insane, but some people don't mind dealing with it as long as there's benefit to be had.

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Postby Robrus1 » Wed Oct 16, 2013 10:15 am

For me it's all about utilization and rewards. I use my AmEx BCP for gas and groceries, AmEx Platinum for travel perks, such as airport lounges, global entry, airline credit, etc. CSP for dining and occasionally travel, AmEx SPG for everything else, because Starpoints are valuable and useful to me. I use my Discover occasionally, depending on the quarterly 5% category. I have never used my CapOne card, and rarely use my credit union card, as it's not a rewards card.
Amex Platinum
Amex BCP 21K
Amex SPG 5K
Barclaycard Arrival Plus WEMC 5K
Chase Sapphire Preferred 23.5K
Credit Union 10K
Discover IT 7.75K

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Postby GabeCR » Wed Oct 16, 2013 12:16 pm

Thanks for the insight. I didn;t mean to generalize and say having more than 1 implies you will screw up. I know a lot of people are very organized.

I am also starting to learn about the benefits of using a lot percentage of your monthly line, so with that said I can see how having a few to use would help with that.

I am actually in a situation now that I have to decide what to do. I got approved for 2 cards. a BOA cash rewards with a $1k line and a chase sapphire with a 5K line. I use Bank of America so would like the easiness of having a credit card with them algo. But the credit line is so low. I called and they said I needed a few months before I could ask for a higher limit. So I'm thinking of just going with the sapphire. My monthly spending would be like $500 a month only.

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