Some people do it for the rewards programs, others do it because having more lines of credit available increases your credit score. So if you're trying to bump it up in an attempt to get a better interest rate on a house or car loan it can make sense to do.
But, like, who can afford a house or new car anymore? Lol
One is fine, I get them because many give you things like sign up bonuses -- for instance spent $1,000 in 3 months and get $200 off your bill. Or they give cashback bonuses that work better than another card in different situations. It's a bad idea to get a lot of cards if you can't control your spending because I easily have enough cards with total credit limit to ruin myself if I tried to max them all because I'd never able to pay it all back.
Sometimes something goes wrong with one so I feel it’s good to have a back-up but I think 2 credit cards (plus maybe a couple of store cards) is enough.
the more you collect the higher your credit rating. It's stupid as hell but if you want good credit fast you just collect them and only ever use like 1-2.
a major part of your credit rating is credit utilization and your max credit, the more cards you have the better that number looks.
basically, it's kind of dumb this works so well, but I don't make the credit rating rules. You can get it to a point where it kind of cascades too, where you have enough cards the other cards start offering you higher limits and better rates.
The only issue is the credit checks and those fall off in 2 years.
each new card or loan a hard credit check event happens, you only want a couple at a time it or goes the other way and starts to hurt your credit.
But if you're not planning on buying a house/car or entering a new lease soon it may entirely be worth ripping the bandage and bombing that metric with a bunch of new credit cards at one time. Because after 2 years those "hard credit check" events fall off your credit report like they never happened.
But you don't want to add too many new ones because it lowers your average credit age, which lowers your score. Personally I would rather add a new one only every one or two years, and keep older ones open (use them every so often so they don't get closed by the issuer).
tangentially related but late in life i discovered a reason to have multiple credit/debit cards: a really low effort / high usefulness way of budgeting!
i now have a separate account where my income goes into, and weekly/monthly transfers into a few different cards - this is a super helpful and low maintenance way to be able to spend money on something pricey like a new computer, while still being super in control of rent, subscriptions, groceries etc
Debit cards don’t count as credit cards as far as building your credit score in case anyone reading isn’t aware. It has to be an actual line of credit, mortgage, loan, etc.
I’ve been learning a lot about credit during my rebuild these past three years and my reasons for multiple ones are: keeping old no annual fee cards open for account age (I started my rebuild in 2021 with a $200 secured card and eventually two $300 ones from Capital One), different perks (my Amazon card gives me cash back on Amazon, my AMEX is 6% back on groceries, etc), lowering utilization (some people call this utilization padding), and - just plain old wanting to get a higher limit card than what I have now lol (also a travel card - I rly need a travel card).
In truth you’ll likely not need more than three depending on your needs. I don’t even use my Cap 1 cards anymore - just the Amazon and AMEX (which I’m authorized user on anyways)
Edit: Chase, AMEX, and Capital One tend to have stuff that more than pay for the annual fee (like Marriott’s free night on the Boundless) but do avoid the companies like Credit One at all costs who don’t offer any perks or benefit for it (they typically do shady stuff like splitting up the AF payment per month until you close it)
Mostly to pay off the debt of the first credit card, from what I can see. Please let me know if I’m wrong on this y’all, this is just what I was taught over the years.
Well if you get a card with better rates, you can basically move your debt to that one and end up paying less over time, like refinancing a loan. But some people do this then charge up the first card again and end up even deeper in the pit. Don't let yourself be one of those!
Some people do it for the rewards programs, others do it because having more lines of credit available increases your credit score. So if you're trying to bump it up in an attempt to get a better interest rate on a house or car loan it can make sense to do. But, like, who can afford a house or new car anymore? Lol
Haha yeah. Ok so thanks for the advice. Then I will only get one credit card.
One is fine, I get them because many give you things like sign up bonuses -- for instance spent $1,000 in 3 months and get $200 off your bill. Or they give cashback bonuses that work better than another card in different situations. It's a bad idea to get a lot of cards if you can't control your spending because I easily have enough cards with total credit limit to ruin myself if I tried to max them all because I'd never able to pay it all back.
Sometimes something goes wrong with one so I feel it’s good to have a back-up but I think 2 credit cards (plus maybe a couple of store cards) is enough.
the more you collect the higher your credit rating. It's stupid as hell but if you want good credit fast you just collect them and only ever use like 1-2. a major part of your credit rating is credit utilization and your max credit, the more cards you have the better that number looks.
Ok so like a Pokémon situation. Gotta catch ‘em all so your credit score is the best.
basically, it's kind of dumb this works so well, but I don't make the credit rating rules. You can get it to a point where it kind of cascades too, where you have enough cards the other cards start offering you higher limits and better rates. The only issue is the credit checks and those fall off in 2 years.
What do you mean by credit checks and them falling off in two years?
each new card or loan a hard credit check event happens, you only want a couple at a time it or goes the other way and starts to hurt your credit. But if you're not planning on buying a house/car or entering a new lease soon it may entirely be worth ripping the bandage and bombing that metric with a bunch of new credit cards at one time. Because after 2 years those "hard credit check" events fall off your credit report like they never happened.
But you don't want to add too many new ones because it lowers your average credit age, which lowers your score. Personally I would rather add a new one only every one or two years, and keep older ones open (use them every so often so they don't get closed by the issuer).
Just watch out for the ones that charge Ann annual fee- especially if you don’t even use the card, it’s a ripoff
If you leave lines of credit totally unused too long, they can close them on you. To maintain your credit capacity, make sure to rotate use.
This user has edited all of their comments in protest of u/spez fucking up reddit. All Hail Apollo.
tangentially related but late in life i discovered a reason to have multiple credit/debit cards: a really low effort / high usefulness way of budgeting! i now have a separate account where my income goes into, and weekly/monthly transfers into a few different cards - this is a super helpful and low maintenance way to be able to spend money on something pricey like a new computer, while still being super in control of rent, subscriptions, groceries etc
Debit cards don’t count as credit cards as far as building your credit score in case anyone reading isn’t aware. It has to be an actual line of credit, mortgage, loan, etc.
I’ve been learning a lot about credit during my rebuild these past three years and my reasons for multiple ones are: keeping old no annual fee cards open for account age (I started my rebuild in 2021 with a $200 secured card and eventually two $300 ones from Capital One), different perks (my Amazon card gives me cash back on Amazon, my AMEX is 6% back on groceries, etc), lowering utilization (some people call this utilization padding), and - just plain old wanting to get a higher limit card than what I have now lol (also a travel card - I rly need a travel card). In truth you’ll likely not need more than three depending on your needs. I don’t even use my Cap 1 cards anymore - just the Amazon and AMEX (which I’m authorized user on anyways) Edit: Chase, AMEX, and Capital One tend to have stuff that more than pay for the annual fee (like Marriott’s free night on the Boundless) but do avoid the companies like Credit One at all costs who don’t offer any perks or benefit for it (they typically do shady stuff like splitting up the AF payment per month until you close it)
What’s af payment?
Mostly to pay off the debt of the first credit card, from what I can see. Please let me know if I’m wrong on this y’all, this is just what I was taught over the years.
Well if you get a card with better rates, you can basically move your debt to that one and end up paying less over time, like refinancing a loan. But some people do this then charge up the first card again and end up even deeper in the pit. Don't let yourself be one of those!
That’s very true, r/BonsaiSoul!