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TPG Readers Consider Whether You Can Have Too Many Credit Cards

Oct. 21, 2018
9 min read
Stacked credit cards
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How many credit cards do you have, and is there really such a thing as too many? Is it better to close an account once you've used the welcome bonus and the annual fee comes around or keep it open to help improve your credit score? One of our TPG Lounge readers recently posed these questions to the rest of the group and, as usual, the answers came pouring in. (Some responses have been lightly edited for style and clarity).

Sticking to 10 or Fewer Cards

There were two distinct camps among TPG Lounge members who chimed in: folks with up to 10 cards and those with more than 10 cards. Here's what the former group had to say.

"I have weaned it down to 10; only four are in my wallet and regularly used (Chase Sapphire Preferred Card, Chase Freedom Unlimited, Ink Business Cash Credit Card, and Starwood Preferred Guest® Credit Card from American Express). I agree with keeping the oldest cards, and most of those for me are fee free. I keep three cards with fees that I don't use regularly: Starwood Preferred Guest® Business Credit Card from American Express, the United Explorer Card (for better award availability and waived checked baggage fees) and Southwest Rapid Rewards Premier Credit Card (annual points bonus negates the fee and I've had the card a long time)." – Tracie C.

"Two cards here: the main one with points that I pay off every month (Southwest Rapid Rewards Plus Credit Card ), and a back up Amex card with a small limit. I have flown free with that Southwest card for a while now." — Carlos L.

"10 and I only pay $200 in annual fees. I may drop one in a few months but the rest each play a role. [I use] three for Chase Ultimate Rewards points, two for hotels, one for cell phone insurance, one for gas, and two for emergencies with balance transfers options." — John B.

"For years I had two, SPG Amex and the United Club Card. Then I started researching and upgraded the SPG one to the Starwood Preferred Guest® American Express Luxury Card and also acquired The Platinum Card® from American Express and Chase Sapphire Reserve. Four cards and four high annual fees, but I do make use of all the perks. I pay everything I can on my credit cards and it’s a lot every month" — Tatiana B.

"I have eight right now. I mostly only use one or two but the free anniversary nights make it worth keeping the others." — Rachel H.

How'd you like to spend a free anniversary night at the Andaz Costa Rica Resort at Peninsula Papagayo? (Photo courtesy of the hotel)
How'd you like to spend a free anniversary night at the Andaz Costa Rica Resort at Peninsula Papagayo? (Photo courtesy of the hotel)

The Perks of Having More Than 10 Cards

It seems while many of our TPG Lounge members have over 10 cards, they're only using a handful for everyday purchases and keeping the rest somewhere safe for the sake of using certain perks as needs arise and maintaining a longer credit history. Which is not a bad strategy by the way — many of us here at TPG are doing just that.

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"[I have] maybe 32? Most never leave the safe. They have no balance, no fees, no point except that I’ve had them for some time and they aren’t worth canceling. Others are for the free night. I use maybe five." — Emilie F.

"17: five from American Express — I'm trying to decide whether to keep my SPG or Marriott Rewards card at renewal — three from Chase for travel rewards, two from Citi, the Capital One Venture Rewards Credit Card for 10x miles on stays booked and paid for at venture [offer ends Jan. 31, 2020], and two department store rewards cards that give me 20% off coupons for sales. Then I have four cards that offer very low interest or 0% options, Lowes (0%) and Discover. Some I only use once a year, but they are cards I have had forever and have no fees." — Colin R. F.

"I think I have around 11 credit cards right now, plus three debit cards for different bank accounts. I don't churn, though. I only open cards that I'm legitimately at least considering keeping. By the way, this doesn't hurt your credit score at all in the long run, only for the first several months to a year after opening a new card. In the long run, it helps your FICO score, because of the lower utilization ratio. My credit score has been over 840 with more than eight cards. I do still have a couple I probably would have already closed if they weren't among my oldest accounts. I've had one of them since I was 18 and the other since I was 20, so my average account age would drop dramatically if I closed them. I just put a few small purchases on them every now and then to keep the accounts active. Neither of those cards has an annual fee. For cards the ones that do, I close them when it looks like the annual fee is going to exceed its marginal utility over the next year — that is, if the value I expect to get from the card beyond what I could have gotten without it starts to exceed the fee." — Ross B.

Do you keep tabs on your FICO Score each year? How do you measure up? Image source: FICO.

Another Good Option: Downgrading

If you're on the fence about certain credit cards and not sure whether or not you're going to cancel them, consider an alternative: downgrading to a fee-free version of the card instead of having to worry about high annual fees.

"Downgrading is typically preferred over canceling, since it generally helps your credit rating and keeps you in the bank’s good graces." — Matthew P.

"You can also look at downgrading cards to a no annual fee version, as long as that free card still allows you to transfer points if needed." — Neel S.

"Closed cards stay on your report and age for 10 years, so closing recently opened cards won’t affect your AAoA [average age of account] for a while. It's better to just keep them open if there is no annual fee. And I wouldn’t close it before it hits; that way you ensure your card is open for the full year. You generally have 30 days after that point to cancel and get the refund. Downgrades generally give you 45-60 days for the refund. Paying off your balances in full every month doesn’t change the fact that closing cards lowers overall available credit, thus increasing your utilization ratio. Thus, keeping cards open helps. Instead of diversifying, I think the focus should be spending on the most flexible currencies, which ultimately is a way of diversifying without tying up points in non-flexible currencies." — Vincent L.

"You can downgrade [the Sapphire Preferred] to one of the Chase Freedom cards. That’s what I did!" — Amanda M.

Downgrading can be another alternative to canceling credit cards with high annual fees. Photo by TPG Staff.
Downgrading can be another alternative to canceling credit cards with high annual fees. Photo by TPG Staff.

You Can Never Have Too Many

Like many things, if you are smart about it, there's no limit to what you can do. These TPG Lounge members offered some great tips if you're planning to have multiple credit cards.

"Unless you're applying for a major loan, I wouldn't worry about having too many credit cards. Personally, once I stop using a card and/or it's benefits, I cancel it." — Devin W.

"I don’t cancel paid off cards I don’t use, especially older ones. It’s good to have a ratio of high available credit vs. utilized credit, same with having older cards. I just cut them up and keep an eye on them to ensure they haven’t been hacked." — Lisa V.

"You may want to put some spend on the older cards once every six months to ensure the banks don’t close them for non-use." — Vincent L.

"Canceling cards after hitting sign-up bonuses can get your account flagged and potentially result in shutdowns these days. Chase and Amex are cracking down on churners because your business isn't beneficial to them. I only sign up for cards that have attractive benefits beyond the bonus." — Colt M.

"Do you find the card's benefits so useful that the annual fee is less than what you get out of it? If so, keep it. If not, ditch it unless you’ve held it for a while. This is a subjective question, so be prepared for varying responses." — Paul F.