Why so many credit cards?

[Minner77]

I just finished reading a very interesting thread about how everyone was calling to reduce rates on multiple credit cards, and I just have to ask: why so many credit cards? Don't multiple cards just present multiple temptations?

We only have one that we actually use -- a Harley Davidson Visa from US Bank that DH earns "chrome cash" with for maintaining his toy. We also have a Quicken Visa that we never use but maintain for emergencies, and one other Visa that our son (16) keeps in his wallet for gas (we live way out of town, so we pay for his gas to and from school -- and he's quite trustworthy).

We pay the cc's off in full every single month -- have never carried a balance. We use cc's because (1) DH likes to see a neat and tidy summary of our month's spending, and (2) he gets chrome cash [fairly new discovery].

Our philosophy has always been that if we don't currently have the money in the bank to buy it, we better NOT buy it. (Well, once, when I was single, I split the payment of my drier over two months on a Sears card...) Our FICO scores are over 800.

I'm a SAHM (until tomorrow, when I start a part-time job -- I'm so excited!), and admittedly DH makes a tidy salary, but we still remain very disciplined about our spending. As I said in a different post, we pay savings as though it were just another bill. Considering he just took a 40% hit in salary (effective 1 Dec 05), with more to come, I'd say that's a good thing. It was so tempting to whip out the Visa over Christmas, but once I'd reached our agreed spending limit, I stopped. I'd rather sleep well at night.

We made a major, painful decision a month ago: not to build our dream house, even tho' we moved to SD with that in mind. But his company (NWA) is too unstable for us to predict the future, so, the way we look at it, you can't eat a house, so we'll stay in the rental while we see what happens. We have the money in the bank to pay for the house, and could live a long time without either of us pulling in a salary, but we just can't do it. We're too, too boring financially! So that's why we currently have zero debt -- no mortgage, paid cash for cars (we planned ahead for the purchases and saved each month), no cc debt. Really, we're incredibly boring -- but at least we know we'll eat and have a place to sleep.

Kindest regards,
Mary

[catzz64]

Mary, I'm not certain which thread you are referring to and I don't think I have an answer to your question, other than to say that people use their resources the way they see is best for them at the time.

I know that when I was 19-20 and had all my credit cards, with the excellent salary I was pulling in at the time there was no question of my ability to pay...and I did, in full almost every month, UNTIL, my company sold and we were all let go so the new owners could bring in "their own people". With a husband and a daughter at 20, we "thought" that was what we were suppose to do...unfortunately we didn't have parents that taught us great financial skills

My situation is quite different today, but I do have quite a bit of debt...due to illness and student loans from trying to retrain for a new career, unfortunately it turned out I was unable to finish school because of my health, so now here I am, trying to clean up a mess that I "thought" was going to help...new career...more money...less financial burden.

We all have different circumstances that get us where we are, I have learned to not judge anyone...no one knows what someone else has been through.

I AM impressed that you and your husband are apparently showing your son how to manage his money! That is a HUGE step in bringing interest rates to a more manageable level...if all of us knew how to use credit wisely, the rates would have to fall!

I do agree that you should only have one or two cards...for emergencies, but again, everyone's definition of emergency is not the same either...

You set a GREAT example for someone like me...I hope to some day be so disciplined, and able to manage my money in a way that evokes pride. I hope to pay cash for our next car, to have enough to buy a home, to send my two boys to college (my daughter is paying her own way), to buy a gallon of milk and not worry if my checking account is going to be overdrawn...it's just not that simple sometimes

[Minner77]

Originally posted by catzz64
Mary, I'm not certain which thread you are referring to and I don't think I have an answer to your question, other than to say that people use their resources the way they see is best for them at the time...

We all have different circumstances that get us where we are, I have learned to not judge anyone...no one knows what someone else has been through.

I AM impressed that you and your husband are apparently showing your son how to manage his money! That is a HUGE step in bringing interest rates to a more manageable level...if all of us knew how to use credit wisely, the rates would have to fall!...
You set a GREAT example for someone like me...I hope to some day be so disciplined, and able to manage my money in a way that evokes pride. I hope to pay cash for our next car, to have enough to buy a home, to send my two boys to college (my daughter is paying her own way), to buy a gallon of milk and not worry if my checking account is going to be overdrawn...it's just not that simple sometimes

Dear Catzzz,

First, after reading your post I realized mine might have sounded preachy, and if it did, I SO apologize -- I certainly did not mean it to! I really am curious, as I've been totally broke in my life and have never had problems with debt, even as a single mom with no child support. I did occasionally use a Sears card (paid off right away, with that one exception), and finally broke down and got a card at a gasoline station as my car was so old it drank gas oil and gas like water and I got tired of stopping for cash to pay for them (again, paid off immed). I even paid off my student loan early, even tho' I had a military deferment, because I could NOT stand the thought of owing anybody any money. My parents were frugal masters (tho' I didn't know it at the time!). and I learned well, I guess.

One thing we think is kind of funny (DH and I) is that people sometimes get frustrated at us for still watching our money when it's no longer so tight! But he and I were both raised with no extras, and I know my family of 7 survived as well as we did because of parents who knew how to stretch a penny -- because they had to! (And, don't you think it's nervy of people to think we should live in a bigger house or drive fancier cars just because of DH's job?)

Of course, as I said, DH's income is no longer so stable, and we've already resorted to our previous method of pretending we have a lower income than we do: we're living as though he's already taken the next paycut.

There were times I stood in front of a pop machine with a quarter and debated whether or not I could afford to buy that pop -- and didn't. We've had our challenges. But your point was SO well made: we had parents who showed us the way. Our sons, when they were younger, tried to get away with telling us that we should buy them things because we clearly had the money. Can you imagine how well that went over???

But again, I apologize if I sounded preachy or self-glorifying.

Kindest regards,
Mary

[Mamaw]

Mary, in my case I can only plead stupidity! LOL But I am sure taking steps to correct the situation now and to try and dig out from under all the debt. I think in most cases it did not seem like "real" money to me. I also never looked at the total amount owed, just the payment amount. Now I know better but it has taken me a long, long time to get to this point! Keep posting your suggestions as you move forward as I am sure they will be helpful!

[AmyBoz]

To be honest, credit cards make me nervous. I'm not tempted to use them (maybe it's the incessant de-clutterer in me) but my thought is "Why have it if you aren't going to use it?"

We have two that we use. ShopRite Amex that gets us rewards towards groceries and a Shell MasterCard that gets us rebates on gasoline. Anything we charge goes on the Amex except for gas and prescriptions, since our pharmacy doesn't accept Amex.

I know that for some people, mulitple cards work. For me, it makes me nervous.

[Telephus44]

I guess that the number of credit cards that you have really depends on your lifestyle and how you manage your money. Everyone has their own style, and what one person feels comfortable with, another person may not.


We have 5 credit cards between DH and I:

1. a Capitol One card in my name only, I had this before we started dating, and this is for my personal use. I pay it off every month and mainly use it for online purchase (I feel safer using a credit card online than a debit card). I pay for this out of my allowance. I also have a Victoria's Secret card - I've had it a long time - I use it mainly to get the coupons and perks. I've only charged stuff on it 4 times in the last 5 years, and every time it was paid off immediately.

2. DH has two cards: a Chase and a Discover. The Chase card was totally paid off/transferred and is only open because we believe that it will boost his credit score (This is a totally separate issue that I don't feel like justifying in this thread - LOL!). The Discover card was in the past used for emergency type expenses (school classes, moving across the country, wisdom teeth). We are paying it off and when we are done it will be his personal card, to do with as he pleases (paid out of his allowance)

3. We currently have one joint card - We got it for the 0% balance transfer to get DH's Chase card down to zero and move over the "joint" expenses off of DH's Discover card. After this is paid off, it will be kept at no balance as a truly "emergencies only" card.

I guess 5 cards would seem excessive to some people, but these fit it with our current financial plan. Like I said, everyone needs to do what works for them!

FYI: My FICO score is around 740 and DH's is aslso around 740.

[SHOPGIRL]

Excellent FICO score Sara!

It's actually better to have multiple credit cards if you want a high
FICO score. It's better to have several cards with balances less than 50% of the credit available vs. one or two cards with maxed out cards. I think most of the time people start off with a department store card, then get a major credit card, and of course then they get a better offer on an interest rate and open up a new card. So, just because someone has say 10 credit cards doesn't mean that they use ALL of them. I have a bunch of cards that are sitting in a desk drawer. I carry 3-4 with me, but that is it. I use one specifically for monthly purchases since I earn miles, then I pay it off at the end of the month.

Just recently I combined a bunch of small balances into one BIG credit card. I did this since I could get 0% for three months. Then, come Feb, it will increase to 12.75%. I have money saved that could be used to pay off debt, but right now I need a very high EF as my husband is unemployed so I'll be responsible for paying all the bills.

[midwestgal]

I have one credit card, VISA. My husband also has VISA and American Express; the latter must be paid off each month in full. Right now, our cards have zero balances. We used to have more cards--Sears, Penneys etc. but we dropped them years ago when we were trying to get a mortgage loan. Our lender recommended that we simplify and close those accounts; it would help our credit rating. (We have very high FICO scores.) I like to have just the one card for emergencies. I just don't like all the bookkeeping with multiple cards and wondering if I paid the bill that month!

I remember the days when it was extremely difficult to get a credit card. Our first card was a Penneys card with a $200 limit. That seemed like such a big deal. But even though it was almost impossible for us to get credit cards early in our marriage, I think it really made us live within our income. We just had to make do or do without. I guess a lot of those old habits have died hard with me!

[Minner77]

Originally posted by SHOPGIRL
Excellent FICO score Sara!

It's actually better to have multiple credit cards if you want a high
FICO score. It's better to have several cards with balances less than 50% of the credit available vs. one or two cards with maxed out cards. I think most of the time people start off with a department store card, then get a major credit card, and of course then they get a better offer on an interest rate and open up a new card. So, just because someone has say 10 credit cards doesn't mean that they use ALL of them. I have a bunch of cards that are sitting in a desk drawer. I carry 3-4 with me, but that is it. I use one specifically for monthly purchases since I earn miles, then I pay it off at the end of the month.

Just recently I combined a bunch of small balances into one BIG credit card. I did this since I could get 0% for three months. Then, come Feb, it will increase to 12.75%. I have money saved that could be used to pay off debt, but right now I need a very high EF as my husband is unemployed so I'll be responsible for paying all the bills.

DH and I both have FICO scores well over 800, despite our paucity of cards. We think it's slightly amusing that my rating is slightly higher than his, even though I haven't pulled a paycheck since 1994, when my youngest was born! We're guessing it's because I temporarily got a Lane Bryant card when I made such a huge purchase that their "get %15 off if you get a card today" saved me a bundle." I told them I was going to immediately cancel, and they didn't care -- and I still get great coupons. Nice deal.

You're definitely right about needing to establish credit: my brother also had my abhorrence of debt, paying for cars and other major purchases with cash, so he couldn't get a loan for a house when he got married, even though he's as solid as a rock financially, and had good money in the bank! He had to rely on his wife's FICO score.... interesting turn of events in this world, huh, when once women couldn't get loans?

My sister, however, literally had to do the freeze-the-Visa thing, and then cancel it altogether, as she had no impulse control whatsoever. If she needed a Visa to rent a car or whatever, she called one of us (we knew she was good for the money).

You are SO right, Miss Sarah -- each of us must figure out her own style.

Good luck and good discerment to us all!

Blessings and kindest regards,
Mary