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The largest collection of valid credit cards belongs to Guinness world record holder Zheng Xiangchen, who has a whopping 1,562 cards. Trust us, you don’t need that many — but having more than one credit card can provide several financial benefits if used carefully.
“For a disciplined card user, there is no downside to having a lot of cards,” says John Ulzheimer, a credit score expert who previously worked for FICO and Equifax. “But, there’s a downside to having too few, especially when it comes to credit scores,” he says. Here’s what you need to know to improve your credit score and maximize your rewards.
Does Having More than One Credit Card Help Your Credit Score?
In most cases, having more than one credit card can help your credit score. “Having multiple credit cards makes it easier to keep your credit utilization low, which is better for your credit scores,” says Mason Miranda, credit industry specialist at Credit Card Insider. Your credit utilization ratio is the amount you borrow compared to your total credit line. “If you have several credit cards with large open and unused credit lines, even a high balance may not impact your credit utilization too much.”
In fact, there’s really no such thing as too many credit cards from a credit scoring perspective, according to Ulzheimer. “Now, having too many cards with balances or having too much credit card debt, yes, that can cause you to have lower scores,” he says. But as long as you pay off your balances in full, “just having a lot of credit cards is not punitive.”
However, you don’t want to apply for too many new accounts over a short period of time if you can help it. Try waiting about six months in between credit applications to be safe, Miranda says.
There’s an exception to this rule of thumb. When you’re shopping to compare rates on things like a mortgage or auto loan, credit scoring models will count multiple inquiries as only one if they are completed over a short period of time, typically 14 to 45 days, according to Equifax.
Another thing to keep in mind is that each credit card issuer has its own rules about how often you can apply for its cards and how many you can have at once. But you’re not likely to bump up against these limits if you acquire cards slowly as Miranda and Ulzheimer suggest.
How Do Credit Scores Work?
Your credit score is a numerical representation of your creditworthiness, or the level of risk a lender takes on when extending credit to you. If you have an excellent credit score, lenders will assume you are likely to make on-time payments, so they’ll offer you the best terms and the lowest interest rates. If you have bad credit, you’ll either get rejected or pay more money to borrow if you’re approved.
There are five key factors that contribute to your FICO score:
Payment History (35%): This looks at your history of on-time and late payments. To improve your credit score, always make your payments on-time and in full. You may want to set up automatic payments to ensure you never miss one.
Amounts Owed (30%): This looks at your overall debt versus your available credit. It’s the key reason it’s important to pay off your statement balances in full each month, says Miranda. This will ensure that you don’t carry a balance and will positively contribute to your credit scores by reducing your credit utilization, he says. Try to keep your credit utilization ratio under 30% for the best credit score.
Length of Credit History (15%): This looks at how long your accounts have been open, typically calculated by taking the average age of all cards. To maintain a longer credit history, you should avoid closing a credit card. “The longer you keep your credit card accounts open, the better,” says Miranda. “This is because credit scoring models like to see mature credit accounts; the older your average age of accounts, the better it is for your credit scores.”
Credit Mix (10%): This looks at the different types of credit you have — revolving (like credit cards or lines of credit), installment (like student loans and mortgages), and open (like utility bills). You can have a great score with just revolving debt but demonstrating that you’re able to manage different types of debt can give you an extra boost.
New Credit (10%): This looks at recent applications for new credit. A new credit card application will cause a small but temporary dip in your credit score, so you should avoid applying for too many cards at once. “This should be treated like a marathon, not a sprint,” says Ulzheimer. “Acquiring credit cards should happen organically, as in when you need them. It should take you many years to build out an inventory of credit cards.”
Which Cards Are Best to Pair Together?
If you can qualify for cash-back or rewards cards, you can maximize your rewards by having more than one. A good strategy is to choose one card with an overall high earnings rate on all purchases and another card or two that earn extra points on a category of spending that is important to you. Here are some card pairings you could consider.
Chase Trifecta and Chase Quartet
Points from Chase Ultimate Rewards cards can be pooled in the same account and used for a single purchase through the Chase Ultimate Rewards Portal, so pairing three or four cards from Chase’s different card families can be a great rewards strategy. For example, you might pair some of these cards together and use each for different purposes:
With this strategy, you can transfer rewards from bonus categories to your Chase Sapphire Reserve card account and use them at the boosted rate — with each point being worth 1.5 cents instead of the standard 1 cent — through the Chase Ultimate Rewards portal. For example, the Chase Freedom Unlimited is offering 5% back on grocery store purchases on up to $12,000 spent in the first year. If you were to transfer those points to your Sapphire Reserve account, they’d be worth 1.5 cents each towards travel. If you were to spend $12,000 at the grocery store in a year, you’d earn $900 towards your next trip. If you don’t want to pay the Chase Sapphire Reserve’s $550 annual fee, you can also use this strategy with the Chase Sapphire Preferred. When redeeming points for travel from your Chase Sapphire Preferred account, each point is worth 1.25 cents.
If you plan to get multiple Chase cards, be aware of the unconfirmed “5/24 rule.” Though the company has not confirmed this rule, it’s rumored that Chase won’t accept your application if you’ve applied for five or more cards (from any issuer) in the last 24 months.
Flat Cash Back and Tiered or Rotating Cash Back Cards
If you’re mostly interested in earning cash back rather than miles, it can be a good strategy to pair a flat cash back card with another card that has tiered cash back on the category of your choice or rotating cash back categories. For example, you might pair the Capital One Quicksilver Cash Rewards Credit Card, which earns a flat rate for all purchases, with the Chase Freedom Flex, which earns 5% cash back in rotating categories each quarter.
Our Experts’ Favorite Pairings
Miranda says he and his wife use a couple of different fee-free cards. “The Citi Double Cash card is our favorite and the one we use most often. It gets us 2% cash back on any purchase from any location that accepts Mastercard. It’s rare to see a cash back card this high of a percentage without an annual fee,” he says. “We use the American Express Blue Cash Everyday® Card specifically for grocery shopping. We get 3% on all our groceries, and there are some good incentives with their partnerships.”
To maximize your rewards, pair an everyday spending card with a card that earns bonus points in a particular category.
Ulzheimer says he pairs a high level travel card with a hotel chain card. “That will take care of just about anything you need for business or personal travel,” he says. The ultimate collection of credit cards for you will depend on how and where you spend your money and what other perks you’re looking for. Pay attention to welcome bonuses as well, since these can help you rack up rewards more quickly.
When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.
However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.
What is Sallie Mae?
Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.
In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.
However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.
In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).
At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.
What is the difference between private and federal student loans?
With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.
On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.
Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.
As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.
Are Sallie Mae loans better than federal student loans?
In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.
However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.
If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.
With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.
The bottom line
Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.
Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.
PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have.
1. Analyze Your Finances Quarterly or Biannually
You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.
With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.
The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.
4. Savings and Retirement Accounts
The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.
A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies.
Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan.
Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito.