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.