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Scott,
I read your article in which you
state that you have 80 or so credit cards. I'm not sure why this is
advantageous. I have cancelled all but one card which I pay in full
each month and by no means see my "options" (to get into
debt, I guess) as being restricted.
For instance, I did need to carry a
balance for 3 months to pay for an engagement ring at the beginning
of this year. All I did was charge it to my everyday card, which has
a lousy rate but gives me perks, get a new card with a low rate so I
paid almost no interest for those three months, then closed that
card when it was paid. This is actually better than calling the
banks for the best rate because the cards with the perks almost
always have the lousy rates, so you're better off putting it onto
one of those cards, and then transferring it to a lower rate card,
then you get the perks.
The problem with having multiple
cards that go unused is that potential creditors will count
available credit against you when you apply for a mortgage or a car.
Also, the more open accounts you
have, the greater the chance of being defrauded. Having only one
card is by no means restrictive there are hundreds of companies who
would give me a card after a 5-minute phone call. I just don't see
the point in keeping cards that aren't being used open. --Keith
Answer
It's true. Between my wife
and myself (joint accounts) we have over 80 credit cards!
WARNING, I am NOT advising anyone to
go and get 80 credit cards! The more credit lines you have
available, the greater the probability you'll increase your debt,
obviously.
So why do I have so many cards?
There are many reasons:
| 1) |
When I
borrow money I want to have many loan options. About half of
my accounts are offering me low-rate transfer deals all the time! I
have purchased used cars with my credit cards at 0%! And because I
have so many cards I can continue to transfer the balances and keep
the rates less than 4% all the time. I've been doing that for
more than 10 years! |
| 2) |
I'm into this topic, saving
money on credit cards. How can I write about credit cards if I don't
have credit cards? How can I verify good credit card offers if I
don't ever receive or use any? |
| 3) |
I actually enjoy trying to uncover
the true costs of credit. I need lots-o-data! |
| 4) |
Who would you want
writing about credit...someone who hasn't had or used a credit card
for 25 years or somebody who deals with credit cards all the time? |
I don't carry a balance on all of
those credit cards. If I did, then this article would be about bankruptcy not being
"debt smart."
If you think 80 credit cards are a
lot then how many do you think the worlds record is?
According to the Guinness Book of
World Records Walter Cavanagh of Santa Clara, CA is "Mr.
Plastic Fantastic" and blows me away with a total of 1,397
unique accounts! I couldn't even image juggling that many credit
cards.
Next, your strategy for using a card
that gives you perks, at 0% for purchases, is good. You used the
perk card then transferred the balance to a low rate card. When you
were done you closed all the accounts. That's great!
I personally don't close the accounts
as long as the banks aren't charging me an annual fee. I keep them
open because they ALWAYS give me a great offer within a couple
months after my balance goes to zero. I don't want to keep applying
for new accounts and closing accounts.
It is true that you're going to have
a difficult time getting a mortgage if you have many open credit
lines--even if the balances are zero. That's because the bank
doesn't want you to have the potential to get into credit card
trouble since it could affect their mortgage profits.
How many cards are too many?
When you apply for a mortgage the
bank may ask you to close some credit card accounts before they
grant you a mortgage. When I purchased my home I had 24 credit card
accounts and I got the mortgage with no problem and no questions
asked. Each bank has it's own lending policies.
As far as having a greater chance of
becoming a victim of fraud, I doubt the number of cards is going to
make you a greater target. In the last email newsletter my friend,
Robert Gamble, told his story of identity theft where someone was
trying to get new credit lines in his name.
Actually, when you think about it,
someone would have a difficult time getting new credit in my name.
If they tried they'd probably get rejected because I have so many
accounts right now. If I only had 2 accounts open then it would be
much easier for someone to defraud me with identity theft. Ironic
isn't it?
And since I don't carry all those
credit cards with me, I only carry 2 in my wallet, I don't have to
worry about losing the actual cards. Also, I keep a list of all the
items in my wallet just in case I do ever lose it. Plus I have every
account and every phone number in a database so I can contact each
bank if there ever was a problem.
You said that you don't see the point
to having that many credit cards. The point is a personal point,
Scott's choice, for Scott's reasons. It works for me and may not
work for everyone. I attribute getting out of debt to having all
those credit cards. I learned how to beat the system by being
immersed in it and developing good "Credit
Card and Debt Management."
--End--
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