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!
I 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)
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.