My Wallet, Credit Card Apps, and Loyalty Cards

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A reader sent me the following email (with my reply):

I have just started reading your blog, and I think it has a lot of interesting points. I am going through the backlogging of entries and I wanted to know if you covered the topic of how many credit cards you have. If not, I’d like to know your take.

I don’t think I’ve talked about how many I have total (I don’t have an accurate count) but here’s an older “Whats in my wallet” type post that might interest you.

I basically use my credit cards as ways to get cash back and build my credit. I currently have three and primarily use citibank professional because it seems to give the most back. I always pay the full balance every month online, so I never incur a late charge or interest. I suspect there are always going to be bigger and better promotions for new credit cards in the future, and I was wondering if it hurts to apply to many credit cards. The only thing I can think of is that it may hurt your credit. (Also, you might get confused with so many different credit cards and forget to pay one that you rarely use. I have an online alarm on mine that alerts me if even a penny is spent on mine so I can keep track of the ones on the backburner).

It hurts to apply to a lot in part because companies realize you have a lot of credit and wonder why you need so much. If you plan on buying anything big, that requires a loan, I’d recommend against apply for credit cards for bonuses or for their lucrative limited time cash back bonuses. Ultimately the hit you take on your credit and the effect is has on whatever rate you’d get on a loan doesn’t make it a sensible decision. On a technical note, it’s the number of hard inquiries, the frequency of those inquiries in the last 30/60 days, and the average age of a line of credit that is negative against you. Some positives, if you get credit, is that you have a lower debt to total credit ratio (since you’ll have more credit). Ultimately, those bonuses and cash back just don’t match up against a higher loan rate.

Also, what about those store credit cards that offer you better rewards when you use them in their stores?

As for store credit cards, I don’t have loyalty to any one store so I don’t use any loyalty cards (some programs, yes, but credit cards, no). If you really want that 10% a purchase, I’d apply to a card with a gift card after purchase because you usually get more out of those.

{ 4 comments, please add your thoughts now! }

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4 Responses to “My Wallet, Credit Card Apps, and Loyalty Cards”

  1. DebtyBetty says:

    I am super scared to see my credit report this month (I subscribe to a monthly credit monitoring service). I applied for three credit cards within the last two months, and I’m wondering the hit that my credit score will take because of it. However, those three credit cards add up to more than $8000 in credit, so my utilization rate will plummet. Although I haven’t seen my scores yet, I’m happy with my decision to apply for several. I travel a lot for work and really wanted some cash back cards to reap some rewards from my work-related travel expenses, which are sometimes quite substantial.

  2. Betty, are you planning on applying for more credit anytime soon? If not, then who cares if you score takes a dip?

  3. the baglady says:

    Yup, I don’t have any loyalty cards either and I only have about 4 credit cards and all of them are rewards cards. I don’t understand why more people don’t use rewards cards. It took my parents years to switch to a rewards card and they could’ve gotten possibly thousands of dollars back in the years they used a regular non-reward card.

  4. ciwood says:

    I have three Cards. I use the GM card to build up a 5% credit for purchasing GM vehicles. I have saved over $4,000 on two purchases (19999 Prism and 2003 GMC Sonoma) over the last eight years. This rebate was in addition other rebates and any deal offered at the dealership. I ended up paying $7800 for a new GMC Sonoma including taxes!!!!

    I have a Chase card in case my GM card ever fails.

    I just ordered a Washington Mutual card (in August) because they offer free access to my FICO score and a 1% rebate. It is great to be able to log on anytime and get my FICO score for free. They update the score monthly. After using the WAMU card for a few months, I intend to go back to my GMcard this month and continue building my rebate toward my next vehicle!!!

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