I just checked my credit report to make sure everything was hunky dory in 2010 (which it was) and I realized that I have nine credit cards open with a total credit line of $55,900!

Too Many Credit CardsI use four of my cards. Three are used for everyday purchases (I use different ones depending on which one will give me the most reward points) and one is a 0% APR card for 36 months from Best Buy, which I’m using to pay off a beautiful 46″ Sony Bravia LCD (aka the love of my life), PlayStation 3, and desktop computer. I know many of you out there think carrying debt is stupid, even if it is 0%, but I’m going to respectfully disagree with you dummies. (I guess it wasn’t very respectful after all…)

I got well over a 10% return in both my 401k and Roth IRA last year, and I would’ve had about $1,300 less money to invest if I paid off this loan. That means I’ve paid 0% to borrow money and got a 10% return on $1,300. I made $130 thanks to having a credit card!  A 0% loan is free money. So there!

Getting back to the original point, I have five credit cards that I don’t use and don’t ever plan to use again. I want to do the right thing for my financial situation and credit score, which means I need to consider closing some accounts.

I don’t know exactly how the credit score formula works (nobody except the people at the credit bureaus does), but I do know some things they like to see:

  • The longer average account age, the better
  • You want a debt to credit ratio of no more than 30%
  • They could theoretically punish me for having so much credit because I “might max out all the cards”

I have all of my cards broken out into three categories. I’m definitely keeping the cards I use, and I’m definitely getting rid of two accounts I opened for free money. I’m not sure about the last three.

Cards I Use
American Express Blue Cash: $10,000 – Jan 2005
Citi Forward: $4,200 – Nov 2010
Chase Sapphire: Credit Limit Not Shown (it’s $6,000) – Feb 2010
Best Buy HSBC: $3,800 – Dec 2009 (balance of $1,213 @ 0% APR)

Outta Here
Express: $1,000 – Apr 2008
Kohls: $1,000 – Jun 2010

Thinking About It
Regions Visa: $11,900 – Feb 2007
Citi PremierPass Elite: $10,000 – Oct 2008
Citi Diamond Preferred: $8,000 – Jul 2008

I think I should keep the Regions card (and maybe even make a small purchase on it to make sure they don’t cancel on me) so I can keep my longest account with the highest credit limit open. Then I could close the other two, reduce my credit by about $20,000, and be down to only five cards.

I’m leaning that way, but I’d like some opinions. Do I have too many credit cards? What should I do?

P.S. This is my 100th post! I can’t believe I’ve already done a hundred of these. I probably would have guessed somewhere around 50 if you asked me to put a number on it. Time flies when you’re having fun and making people laugh! I also have 20 videos, which means 1/5th of my posts are videos. Again, very surprising to me.

This post was featured in the Totally Money Blog Carnival at Budgeting in the Fun Stuff