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My Wallet, Credit Card Apps, and Loyalty Cards
Posted By Jim On 11/16/2007 @ 4:02 pm In Credit | 4 Comments
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.
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 “Whats in my wallet”: http://www.bargaineering.com/articles/whats-in-your-wallet.html
 credit cards for bonuses: http://www.bargaineering.com/articles/100-credit-card-signup-deals.html
 I don’t use any loyalty cards: http://www.bargaineering.com/articles/what-is-your-favorite-customer-loyalty-program.html
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