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| Credit tips, plus my top credit cards |
| by Brian Kelly |
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How many credit cards should you have? This is a question I often get asked. Like many things, it’s personal, but I firmly believe if you have good credit, know how to use credit and are not going to go into debt, then around five credit cards would be reasonable.
Ideally, if your goal is to earn points and miles while maintaining good credit and building your credit profile, you should consider having at least one Visa, one Mastercard and one American Express, and then cards that reward you where you spend the most money (such as dining or travel) and then also a card that gives you a really solid base earning rate — like the Capital One Venture X Rewards Credit Card, which earns 2 miles per dollar on everyday spending. You want to pay attention to annual fees, though, and make sure that you are getting more value out of the card than the annual fee each year.
For anyone who rents, consider a card that earns points on rent payments, like the Bilt Mastercard® (full disclosure: I’m a Bilt investor and adviser). The American Express® Gold Card earns 4 points per dollar spent on dining and groceries*, and the Chase Sapphire Reserve® earns 3 points per dollar spent on all travel, including ride-hailing services, parking, tolls and travel agents. And then have one or two cobranded cards with the airlines or hotels where you fly or stay; these cards often provide a pathway to elite status and sometimes certificates for a companion fare or free night stay.
The cards I use the most are the Amex Gold and Capital One Venture X as noted above, then the American Express® Business Gold Card and Ink Business Preferred® Credit Card for my business expenses. For my travel expenses I use the Chase Sapphire Reserve for Uber and hotels and my Platinum Card® from American Express for 5 points per dollar spent on airfare**.
I personally have 28 credit cards and I just checked my credit score — most major credit card companies will let you check for free in their apps — and my score is 810. The apps show FICO scores, which are generally the most reliable and what most lenders use to determine your creditworthiness.
The core to this game is paying your bills on time and keeping your debt-to-credit ratio low — so not carrying balances and paying off your bills in full each month.
You want your debt-to-credit ratio to stay low, around 10%-30% or less on any given month, meaning you have a lot of available credit. So when you spend on credit cards, even if the credit card companies report midmonth before you can pay your bill, it’s still not dinging you because you have a lot of available credit and your utilization is low.
If you need ways to increase your credit score, you can check out our guide on how to build credit. Here are a few tips:- Be added as an authorized user on a credit card of someone who does have good credit. This is also a great way for teens to build their credit in high school and college. If you add someone as an authorized user, you are liable for their charges, so only do this with someone you know and trust. TPG’s beginners guide to credit is a helpful tool.
- Dispute any inaccuracies on your credit report. And if you have any lenders that have reported a late payment, contact them to see if they will waive it. It never hurts to ask.
- Start with a basic credit card — the Chase Freedom Unlimited® is a great starter card. Start with everyday purchases and pay them off in full each month and you will start to see your credit score go up.
In general, there’s no set limit to the number of credit cards you can have if you have good credit, so it’s always a good idea to keep an eye on valuable sign-up bonuses (many are worth over $1,000!) and find cards that reward you for where you spend the most.
Have a great weekend,
BK
* U.S. supermarket purchases earn 4 points per dollar up to $25,000 per calendar year and dining up to $50,000 per calendar year in purchases, then 1 point per dollar.
** on up to $500,000 on these purchases per calendar year.
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| Photo Credit: JONNO RATTMAN. |
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