HOW MANY CREDIT CARDS IS TOO MANY ?
HOW DO YOU KNOW IF YOU HAVE TOO MANY CREDIT CARDS?
How many are too many? Is there a set rule or a prescribed limit? Apparently not from what I have read. But what I have found is that when I have to spend hours almost daily to monitor them, it is too many for me.
HOW DID I END UP WITH SO MANY CREDIT CARDS?
When I discovered that cash reward credit cards could be a reliable way to reduce my monthly expenses, I started applying for them as often as I could. Of course, the idea was to get the largest promotional welcome bonus, the highest % of cash rewards as well as a substantial amount of available credit. Therefore for about the last three years, gathering cash reward credit cards has become a major pastime. Well, guess what? Now I have too many cards.
THE JOURNEY TO TOO MUCH
It has been a tremendously educational experience collecting all the cards I have. Primarily, it has helped and still helps to reduce my expenses. In addition, I have written many blog posts and several Ebooks about this. Doubtless, there will be more. But the most significant comment I can make at this time is that right now I have too many. As I mentioned in a previous blog post, I have reached critical mass.
For most of this time, my primary concern has been focusing on the 5 or 6 FICO® credit score factors that go into building a good credit score. Certain cards have taken priority for charging purchases. Then it recently occurred to me that if I did not start using all of my cards, some could be closed for inactivity. That could affect my credit score negatively by lowering my available credit, changing the average length of time I have had cards and flagging too many closures. Low and behold, that is exactly what happened this week. One of my co-branded cards was closed without notice for inactivity.
HOW MANY CARDS DO I NEED?
I need enough cards to satisfy the FICO® score factors. Fortunately, I found a formula that I could use to determine how many cards to own, which ones to keep and those to phase out since I had surpassed critical mass. These are the factors I now consider in which cards to use:
a. the oldest aged accounts
b. those with the best credit line and lowest credit utilization ratio
c. the ones with optimal returns in my top spending categories
d. those that give me the maximum value for use with my favorite merchants, stores, airlines or hotels
HOW MANY CARDS DO I WANT?
My sense is that I would like to have no more than ten at the most. For example, my ‘straight flush’ analogy illustrates most of them. Beyond that, I think that one or two travel cards are essential. Other than that, an additional card or two in the ‘straight flush’ formula would be OK too.
CONCLUSION
I am at a new beginning. I have climbed the credit card mountain in excellent standing. Now it is time to descend the other side with equal care. Therefore future writings on this topic will involve reducing my load doing my best to maintain my great credit card standing while keeping also 6 FICO® score factors in balance.
SOURCES & RESOURCES
How Many Credit Cards Is Too Many?
How Many Credit Cards Should I Have?
Images of Many credit Cards
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CREDIT MONITORING ALERT: ACCOUNT CLOSED
YOUR ACCOUNT HAS BEEN CLOSED
‘Account Closed, SYNCHRONY NTWRK’. This is the credit monitoring alert I received on September 23, 2019 from two of my weekly lists for credit card account activity. CreditSesame posted one of them and WalletHub posted the other one.
WHAT DID AN ACCOUNT CLOSING MEAN?
These and other questions raced through my mind. The only thing that was clear was that one of four Synchrony cobranded credit card accounts were involved. The reason was that the symbol ‘SYNCHRONY NTWK’ was included. Other than that, I did not know which card had been closed. In fact, my biggest concern was not which card it was but how this would affect my credit score.My concern involved several credit card score factors. First of all, as a result of a credit card closing, I would have less available credit. That could affect my ‘available credit ratio’ credit score factor. I could lose points on my credit score because this ratio is one of six major factors in determining one’s credit score. But let me not get ahead of myself. Before anything else, I had to figure out which card had been closed.
WHAT ACCOUNT HAD BEEN CLOSED?
Since I couldn’t tell from the details provided in the closing notice which card had been closed I had some searching to do. In fact, all that was clear was that it was a Synchrony card. That meant it was a co-branded card. In fact, this was the third time a co-branded card had been closed:First was my Best Buy card co-branded with CitiBank
The Second was my Lane Bryant card co-branded with TD Bank
And now one of my cards co-branded with Synchrony Cards
THE SEARCH
I went online. One by one I checked each Synchrony cobranded account. When I came to the ‘Welcome Home’ Synchrony card, I received a response that no such account existed. Right there was my clue.
THE EVIDENCE
To be certain, I called them. Sure enough, their response was that the card had remained inactive for too long. Since I had not used it since February 3, 2017, two and a half years, they were entitled to close it without any written warning or final notice. Actually, they do not have to provide any. Instead, I had been responsible for the account closing. This is because I had not paid attention to the cobranded card closing game.
THE COBRANDED CREDIT CARD CLOSING GAME
Then I remembered that this was exactly what had happened with two of the other times there had been a card closing. A pattern began to emerge with these co-branded cards, USE IT OR LOSE IT!.In fact, inactivity is the death knell for a co-branded card, because:
These cards are primarily designed for making large purchases to be paid over a long period of time without interest. But, the card company does earn interest when the account can’t be paid on time. In addition, this kind of purchase needs to be made on going to keep the co-branded card alive.
THE EFFECT ON MY CREDIT SCORE
Fortunately, even though I have had a few closings, my credit score seems to have lost only a few points, if any. As a matter of fact, I still have a credit score of over 800. Besides that, I don’t think the ‘length of time factor’ was hurt either. Lastly, I am relieved to have one less card to worry about. Everything should return to my best score within a month or two. But this account closing reminds me of how ‘high maintenance’ a co-branded credit card can be.
SOURCES & RESOURCES
What To Do When An Issuer Closes Your Credit Card
Your Credit Card Could Be Closed Due to Inactivity
CreditSesame.com
WalletHub.com
Synchrony HOME Card
Network vs. Co-Branded Cards
Your Credit Card Account Has Been Closed
FICO’s 5 Factors: The Components of a Credit Score
How We Got Perfect Credit Scores
