If you are a homeowner with a mortgage, you might have heard about your right to redemption. For those who have been struggling to make their house payments, this is one route that can be taken to avoid foreclosure.Â Â
What is the Right of Redemption?
If you own real estate, making mortgage payments can be hard, but foreclosure is something that most people want to avoid. The right of redemption is basically a last chance to reclaim your property in order to prevent a foreclosure from happening. If mortgagors can manage to pay off their back taxes or any liens on their property, they can save their property. Usually, real estate owners will have to pay the total amount that they owe plus any additional costs that may have accrued during the foreclosure process.Â
In some states, you can exercise your right to redemption after a foreclosure sale or auction on the property has already taken place, but it can end up being more expensive. If you wait until after the foreclosure sale, you will need to come up with the full amount that you already owe as well as the purchase price.Â Â
How the right of redemption works
In contrast to the right of redemption, exists the right of foreclosure, which is a lenderâs ability to legally possess a property when a mortgager defaults on their payments. Generally, when you are in the process of purchasing a home, the terms of agreement will discuss the circumstances in which a foreclosure may take place. The foreclosure process can mean something different depending on what state you are in, as state laws do regulate the right of foreclosure. Before taking ownership of the property through this process, lenders must notify real estate owner and go through a specific process.Â
Typically, they have to provide the homeowner with a default notice, letting them know that their mortgage loan is in default due to a lack of payments. At this point, the homeowner then has an amount of time, known as a redemption period, to try to get their home back. The homeowner may have reason to believe that the lender does not have the right to a foreclosure process, in which case they have a right to fight it.Â
The right of redemption can be carried out in two different ways:
You can redeem your home by paying off the full amount of the debt along with interest rates and costs related to the foreclosure before the foreclosure sale OR
You can reimburse the new owner of the property in the full amount of the purchase price if you are redeeming after the sale date.Â
No matter what state you live in, you always have the right to redemption before a foreclosure sale, however there are only certain states that allow a redemption period after a foreclosure sale has already taken place.Â
Redemption before the foreclosure saleÂ
Itâs easy to get behind on mortgage payments, so itâs a good thing that our government believes in second chances. All homeowners have redemption rights precluding a foreclosure sale. When you exercise your right of redemption before a foreclosure sale, you will have to come up with enough money to pay off the mortgage debt. Itâs important that you ask for a payoff statement from your loan servicer that will inform you of the exact amount you will need to pay in order save your property.Â
Redemption laws allow the debtor to redeem their property within the timeframe where the notice begins and the foreclosure sale ends. Redemption occurring before a foreclosure sale is rare, since itâs usually difficult for people to come up with such a large amount of money in such a short period of time.Â
The Statutory Right of Redemption after a foreclosure saleÂ
While all states have redemption rights that allow homeowners to buy back their home before a foreclosure sale, only some states allow you to get your home back following a foreclosure sale. Known as a âstatutoryâ right of redemption, this right as well as the amount of time given to exercise it, has come directly from statutes of individual states.Â
In the case of a statutory right of redemption, real estate owners have a certain amount of time following a foreclosure in which they are able to redeem their property. In order to do this, the former owner must pay the full amount of the foreclosure sale price or the full amount that is owed to the bank on top of additional charges. Statutory redemption laws allow for the homeowners to have more time to get their homes back.Â
Depending on what state you live in, the fees and costs of what it takes to exercise redemption may vary. In many cases during a foreclosure sale, real estate will actually sell for a price lower than the fair market value. When this happens, the former owner has a slightly higher chance of being able to redeem the home.Â
What You Should Know About the Right of Redemption is a post from Pocket Your Dollars.
The following is a guest post by Lisa Bigelow, a content writer for Bold.
When it comes to paying for college, the anxiety about how to leave college debt-free starts early. And for thousands of grads who are buckling under the weight of monthly student loan payments that can cost as much as a mortgage, that worry can last for as long as 25 years.
According to EducationData.org and The College Board, the cost of a private school undergraduate education can exceed $200,000 over four years. Think you can avoid a $100k+ price tag by staying in-state? Think againâmany public flagships can cost over $100,000 for residents seeking an undergraduate degree, including room and board. And with financial aid calculators returning eye-poppingly low awards, youâd better not get a second topping on your pizza.
In fact, youâd better hope that you can graduate on time.
The good news is that you can maintain financial health and get a great education at the same time. You wonât have to enroll as a full-time student and work 40 hours a week, eitherâeach of the methods suggested are attainable for anyone who makes it a priority to leave college debt-free.
Here are four practical ways you can leave college debt-free (and still get that second pizza topping).
1. Cut the upfront sticker price
Donât visit schools until you are certain you can afford them. Instead, prioritize the cost of attendance and how much you can afford to pay. Staying in-state is one easy way to do this. But if you have wanderlust and want to explore colleges outside state lines, an often-overlooked method of cutting the upfront cost is the regional tuition discount. Many US states participate in some form of tuition reciprocity or exchange programs. You can explore the full list of options at the National Association for Student Financial Aid Administrators website.
Letâs explore how this works. As a resident of a New England state, for example, you can study at another New England stateâs public university at a greatly reduced cost if your home stateâs public schools donât offer the degree you want. So, for example, if you live in Maine but want to go to film school, you can attend the University of Rhode Island and major in film using the regional tuition discount.
Some universities offer different types of regional discounts and scholarships that appear somewhat arbitrary. The University of Louisville (in Kentucky) includes Connecticut in its regional scholars program. And at the University of Nebraska, out-of-state admitted applicants are eligible for several thousand dollars in renewable scholarship money if they meet modest academic standards.
If you already have your heart set on an expensive school and youâre not likely to qualify for reciprocity, financial help, or merit aid, live at home and complete your first two years at your local community college.
Hereâs another fun fact: in some places, graduating from community college with a minimum GPA gives you automatic acceptance to the state flagship university.
2. Leverage dual enrollment and âtesting outâ
When you enroll in a four-year college itâs pretty likely that youâll spend the first two years completing general education requirements and taking electives. Why not further reduce the cost of your education by completing some of those credits at your local community college, or by testing out?
Community college per-credit tuition is usually much cheaper than at four-year colleges, so take advantage of the lower rate in high school and over the summer after youâre enrolled in your four-year college.
But beware: youâll probably need at least a C to transfer the credits, so read your institutionâs rules first. Also, plan to take general education and low-level elective classes, because youâll want to take courses in your major at your four-year school.
If youâve been given the opportunity to take Advanced Placement courses, study hard for your year-end exams. Many colleges will accept a score of 3 or higher for credit, although some require at least a 4 (and others none at all). Take four or five AP classes in high school, score well on the exams, and guess what? Youâve just saved yourself a semester of tuition.
3. Take advantage of financial aid opportunities
After taking steps one and two, you probably have a good idea of what the leftover expense will be if you want to leave college debt-free. Your next job is to figure out how to cut that total even more by using financial aid. There are four types to consider.
The first is called need-based aid. This is what youâll apply for when you complete your Free Application for Federal Student Aid. Known as the FAFSA, this is where youâll enter detailed financial information, and youâll need at least an hour the first time you complete this form. Hint: apply for aid as soon as the form opens in the fall. It is not a bottomless pot of money.
There is also medical-based financial aid. If you have a condition that could make employment difficult after graduating from college, you may be eligible, and qualifying is separate and apart from financial need and academic considerations.
The third type of aid relates to merit and is offered directly by colleges. Some schools automatically consider all accepted applicants for merit scholarships, which could relate to academics or community service or, in the case of recruited athletes, athletics. At other universities, youâll need to submit a separate scholarship application after youâve been admitted. Some merit awards are renewable for four years and others are only for one year.
If you didnât get need-based or merit-based aid then you still may qualify for a private scholarship. Some require essays, some donât, and some are offered by local community organizations such as rotary clubs, womenâs organizations, and the like. Donât turn your nose up at small-dollar awards, either, because they add up quickly and can cover budget-busting expenses such as travel and books.
4. Find easy money
Small-dollar awards really add up when you make finding easy money a priority. Consider using the following resources to help leave college debt-free:
Returns from micro-investing apps like Acorns
Tax return refunds
Browser add-ons that give you cashback for shopping online
Rewards credit cards (apply for a travel rewards credit card if youâre studying out of state)
Asking for money at the holidays and on your birthday
Working part-time by capitalizing on a special talent, such as tutoring, photography, or freelance writing
Leave College Debt-Free
Finally, if you have to take out a student loan, you may be able to have it forgiven if you agree to serve your community after graduation. The Peace Corps is one such way to serve, but if you have a specialized degree such as nursing, you can work in an underserved community and reap the rewards of loan forgiveness.
Lisa Bigelow writes for Bold and is an award-winning content creator, personal finance expert, and mom of three fantastic almost-adults. In addition to Credit.com, Lisa has contributed to The Tokenist, OnEntrepreneur, College Money Tips, Finovate, Finance Buzz, Life and Money by Citi, MagnifyMoney, Well + Good, Smarter With Gartner, and Popular Science. She lives with her family in Connecticut.
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Rumor had it that the NBA superstar Shaquille O’Neal was dabbling in the art of home flipping, when he put his luxurious home in a gated equestrian community in Bell Canyon, CA, on the market for $2.5 million in late 2019.
The big man purchased the place in February 2018 for $1,815,000, and owned the home for only a little more than a year before he decided to sell.
However, if Shaq harbors dreams of an HGTV spinoff show, he’ll have to improve his return on investment. He recently let the home go for $1.85 million.
The five-bedroom, 4.5-bathroom, traditional-style home is on a fenced and gated acre lot, ideal for an owner who craves privacy.
O’Neal perked up the 5,217-square-foot home with new carpeting, fresh paint, customized closets, and improved landscaping. The home was originally built in 1990, and its HVAC system, garage door, and some of the plumbing were also updated.
There’s plenty of proof of the property’s provenance. O’Neal’s images, trophies, and mementos greet visitors the second they set foot in the grand black-and-white, two-story formal entry, with a large staircase and circular gallery.
The home has a number of highlights: a wide-open floor plan, beamed ceilings, and hillside views. The kitchen, however, is the true showstopper, according to the listing agent, Emil Hartoonian of The Agency.
“Buyers loved the kitchen and its brightness. They also loved the open living space, with no shortage of natural light and flow,” he says.
Watch: NBA’s Blake Griffin Nets Another Home In Los Angeles
The kitchen has marble counters, a large center island, built-in stainless steel appliances, and designer cabinetry.
Other luxe features in the residence include a wine closet and wet bar in the great room, a media room with a convenient kitchenette, a screening room, and a spacious office with splendid views.
The luxury spills into the outdoor spaces as well. Out back, there’s a rock-rimmed heated pool and spa, a fire pit, multiple seating areas, and manicured lawns.
“We presented this property in the light it deserved, and helped buyers see the true value of a premier updated property behind guard-gates,” Hartoonian says.
He co-listed the property with Nicholas Siegfried, also of The Agency. Gary Keshishyan Pinnacle Properties represented the buyers.
But waitâthere’s more. O’Neal’s sale in Southern California isn’t his only recent real estate success.
The famous “Shaq-apulco” in Windermere, FL, which has been on and off the market at varying prices over the past couple of years, appears to have found a buyer.
O’Neal first put the massive estate on the market in 2018, for $28 million. It was most recently listed at $16.5 million, and a sale is now pending on the 4-acre waterfront property, with its 31,000-square-foot mansion.
O’Neal, 48, is reportedly spending more time in Atlanta with his NBA on TNT gig. The Hall of Famer won four NBA titles during his 19-year NBA career.
The post Shaquille O’Neal Recruits a Buyer for a Luxury $1.85M Spread in SoCal appeared first on Real Estate News & Insights | realtor.comÂ®.
First-time home buyers today face a tough road, shopping for homes during a pandemic, high housing prices, and deep economic uncertainty. For military families deployed overseas, it’s all even trickier to figure out.
In this second story in our new series “First-Time Home Buyer Confessions,” we talked with husband and wife Kyle LaVallee and Natalie Johnson. They were renting an apartment in Fayetteville, NC, when they decided to start shopping for their own home in the area in April.
At the time, LaVallee was stationed in the Middle East as a sergeant in the U.S. Army. Yet even though he was thousands of miles away, he managed to attend every home tour with Johnson via FaceTime. In July, they closed on a brick, ranch-style three-bedroom that LaVallee would not see in person until a long-awaited trip home in October.
Here’s the couple’s home-buying story, the hardest challenges they faced, and what LaVallee thought of his new house once he home managed to lay eyes on it for the first time.
Location: Fayetteville, NC
House specs: 1,166 square feet, 3 bedrooms, 2 bathrooms List price: $111,900 Price paid: $115,000
A pandemic plus deployment seems like a tough time to buy your first house. What convinced you to forge ahead?
Johnson: Kyle was deployed in October 2019 while we were renting a one-bedroom apartment in Fayetteville. Kyle wasnât fond of renewing the apartment leaseâwe had been there for two years and were running out of space. We wanted to get a dog; we wanted a yard, and our own property where we can do anything we wanted.
We started educating ourselves on the process. We knew a mortgage was going to be significantly less than what we were paying in rent. Kyle thought it would be smart to buy because [nearby] Fort Bragg is one of the biggest military bases in the world. If we ever leave or get stationed somewhere else, weâre not going to have a problem finding anyone to rent it. And we could always come back.
LaVallee:Â I was interested in gaining equity and ownership, rather than just paying to rent something I’d never own in the end.
Johnson:Â We started looking at houses back in January. In April, we kept seeing information about lowering interest rates. Thatâs why we got serious about the process in the middle of the pandemic, and when we connected with our real estate agent, Justin Kirk with Century 21.
How much did you put down on the houseâand how’d you save for it?
Johnson: We put 20% down.
LaVallee: I was making a lot of money while I was deployed, and I had no expenses really. I was just saving everything I had, knowing I wanted to invest it in a house.
Johnson: I cut spending. I didnât buy things I wanted, just what I needed. The pandemic helped a lot, honestly because we obviously couldnât go out.
LaVallee:Â We qualified for a VA loan, but we just wound up using a conventional loan. Most people in the military will use a VA loan where you donât put any money down, but [since we had enough saved] we wanted the lowest monthly mortgage payments.
What were you looking for in a house?
LaVallee:Â We knew we might [eventually] be moving, so it wasnât like it had to be a house we would stay in forever, more of an investment property.
Johnson: We were looking for things that would be attractive to future renters. We had a military family in mind because Fayetteville’s got more than 50,000 active-duty. We looked for a location close to a Fort Bragg entrance. We thought three bedrooms was perfect for us because our families are close with each other, so theyâll all come down at the same time so weâll have two extra bedrooms for them. Kyle really wanted a garage, so that was a huge thing.
LaVallee: Garages arenât very common down here, so that limited a lot of options for us. A lot of houses have carports, or they finish the garage and turn it into a bonus room.
Johnson: We wanted something that needed a bit of fixing up, because we like to be handy and put our personal touch on everything, and we ultimately knew that would be a lower-cost house.
How many homes did you see in person, and how did Kyle participate from overseas?
Johnson:Â It was 10 or 12 homes. We were out three to four times a week looking at places with our real estate agent. We wore our masks for the tours, and I used hand sanitizer since I was opening and closing drawers and closets. Most were vacant, but we did tour one house that still had people living in it, although they were gone during the tour, so we avoided touching a lot of things.
During tours we FaceTimed Kyle in. We figured that was probably the most convenient way to do it since he could see every single house and room in detail.
LaVallee:Â Well, I couldnât really see all the details.
Johnson: He got to know our real estate agent really well via FaceTime. Our agent would say, “Let me know if you need me to hold Kyle while you go look in this room.” I felt so bad, though, because I work full time, so I’d tour homes around 5:30 in the evening, which for Kyle was 2:30 in the morning. But he stayed up for every single tour.
LaVallee:Â I was sometimes frustrated not being able to be there. I left it all up to her. I had to trust the feelings and vibes she got from each house.
How many offers did you make before you had one accepted?
Johnson:Â We put three earlier offers in.
LaVallee:Â They would be listed and the next day would be sold. The first three offers we put in were asking price, and Iâm pretty sure everybody else offered more, and ours were never even considered.
Johnson:Â It was ridiculous. It was definitely a sellerâs market, so you had to act really fast and you had to be really competitive. On our fourth offer, we ended up at $3,100 over asking. I felt like we had to fight for this house.
Were you competing with other offers for the house you bought?
LaVallee:Â There were multiple offers.
Johnson: Our real estate agent told us, “You should definitely write a letter and talk about how Kyleâs gone right now and youâre first-time home buyers and this one really clicked with you,â which it did. The second I walked in, itâs this adorable brick house, itâs super homey, it has a great yard. In the letter, we just talked about how all of that was so attractive to us as first-time home buyers, and we were really excited and could see ourselves in this home.
Our real estate agent suggested going in higher than asking, so we just rounded up to $115,000. He also suggested doing a higher due diligence paymentâwe usually did $200, but this time around we did $500. And the earnest fee we put in was $500 or $600.
After our offer was accepted, we knew it was going to be kind of difficult with the home inspection. They were already redoing the roof, which was a huge cost on their part, so asking for more was definitely going to be a challenge. So we didnât ask for much.
What surprised you about the home-buying process?
Johnson:Â How fast it went, for me at least. Our first home tour was in April and then by June, we had found our house and the contracts were written up. I guess I was expecting it maybe to be double the time that it actually was, but houses were just turning over so fast, we had to act fast.
LaVallee:Â From my side, I thought it happened very slowly! I felt like so much was happening in between each step in the process. I had to be patient because I had so little control of the situation, other than just trying to stay involved and be a part of it.
Johnson:Â You never really think that when youâre married, youâre going to buy your first house while your husband is on the other side of the world. But we got through it.
So Natalie, you were living in the house for a few months before Kyle returned from deployment in October to see it. What was that homecoming like?
Johnson:Â He came home a few days shy of the 365-day mark. We were anxious and excited. Several other families and I waited outside of a hangar on base, and soon after hearing their plane landing, we saw the group walking toward us and everyone start cheering and crying.
Because it was dark when we got home, Kyle couldnât see the outside of the house much, or the “Welcome Home” decorations I hung up! But the moment he set foot in the front door, he just stood there and looked around with the biggest smile on his face.
I gave him the grand tour the next morning. He said it looked much bigger than what he saw on FaceTime. We celebrated with a home-cooked meal and the wine our agent gave us when we closed. It was really special.
LaVallee:Â I came home to a nice house. Natalie was worried I would come back to culture shock. But Iâve felt at home ever since Iâve been here.
What’s your advice for aspiring first-time home buyers?
Johnson:Â I would say to go with your gut. Some of the houses youâll tour are really logical to buy, but if they have a bad vibe or theyâre just not really welcoming, then look at others. A healthy balance between logic and feeling is important.
LaVallee:Â We didn’t even know what we wanted until we saw five or six houses, so itâs definitely important to shop around and see what’s out there.
Johnson: We really didnât know much. I told our real estate agent, “Hey, listen, weâre really going to need some guidance. We donât know what things mean, we need you to break it down for us. You have to be patient with us.” I reached out to three different real estate agents, and Justin was the one who not only answered all my questions but was giving a ton of positive feedback. It was nice to have that encouragement, and it definitely made us more confident. You learn a lot by looking at houses, you learn a ton about yourself.
The post What This Military Family Facedâand FoughtâTo Buy Its First House appeared first on Real Estate News & Insights | realtor.comÂ®.
In its first meeting for 2021, and its first one during the Biden administration, the Federal Reserveâs rate-setting body voted to hold its target interest rate steady in the 0% to 0.25% range.
This means there is not likely to be much upward movement in variable credit card interest rates, which are typically tied to the Fedâs target interest rate, or the fed funds rate.
The Fed will also continue with its purchases of at least $80 billion in Treasury securities and $40 billion in agency mortgage-backed securities every month to further support the economy.
See related: What to expect from Biden, Harris on financial policy
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In a media release, the Federal Open Market Committee said, âThe pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic. Weaker demand and earlier declines in oil prices have been holding down consumer price inflation. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.â
The course of economic growth will depend on how effectively the pandemic is reined in, including with the use of vaccinations. Meanwhile, the Fed will aim to maintain its almost 0% target rate until it deems the economy to have attained âmaximum employmentâ and inflation outpaces its 2% target for a while.
The Fedâs aim is for inflation to overshoot its 2% target for a while so that average inflation remains around 2%, considering that inflation has been running below target for several years now.
In a related press conference, Fed Chairman Jerome Powell noted that there are positive signs for the economy going forward, and a number of forecasts call for a stronger economy in the second half of the year because of vaccine rollouts and fiscal stimulus. He expects that âwidespread vaccinations would enable us to putÂ the pandemic behind us.â
Powell added that thereâs ânothing more important to the economy right now than people getting vaccinatedâ since that will enable everyone to get back to work. He himself has had his first vaccination shot and expects to be getting a second one soon, he mentioned.
However, he sees the pandemic as still presenting âconsiderable downside riskâÂ to the economy considering that no one knows how the vaccination rollout will go. Given this, the Fed has set its policy to be accommodative until it actually sees economic improvement.
See related: Millennials defer debt payoff, tap savings in pandemic
Full employment recovery a long way off
Considering that the shock from the pandemic âwas unprecedented both in terms of its nature and its size,â in modern history, the economy is still at least nine million jobs short of maximum employment, according to Powell. He also noted that the real unemployment rate is at least 10% taking into account people who have dropped out of the labor force.
He is concerned about any potential long-term damage from unemployment to people, which will ultimately prevent the U.S. economy from achieving its full productive potential.
Powell also pointed to racial disparities in terms of employment gaps, wealth gaps and home-ownership gaps that âeven controlling for many other factors, theyâre persistent and difficult to explain.â Broader prosperity for everyone is important since the Fed wants the âpotential output of the economy to be as high asÂ possible.â
See related: Pandemic pins parents under financial strain: Survey
Fed doesnât see transient inflation rise as a threat
Although there could be a rise in inflation as the economyÂ reopens, Powell expects this to be transient and not âtroubling inflation.â The world has been facing âdisinflationary pressuresâ for a while now, and Powell is more concerned about any damage to people and the economy from tightening its monetary policy too soon than about fighting off the possibility for higher inflation.
He also doesnât see risks to financial stability as high, based on asset prices and the use of debt by the banking system, businesses and households. News about vaccines and fiscal policy is what is driving asset prices, as he sees it.
Itâs premature for the Fed to think about rolling back its securities purchases and start being less accommodative, according to Powell. The Fed has learned a lot from its experience after the global financial crisis and the âtaper tantrumâ that ensued after it decided to start tightening its monetary policy during that recovery.
Accordingly, it will communicate its policy stances well in advance and be transparent this time around. âItâs too soon to be worried. When it comes (time) to exit, we know how to do that,â Powell said.
It would be easy to fill up a wallet with just credit cards. A card to maximize airline miles. A card targeted at your favorite hotel chain. A card that gives you cash back on groceries. Even a card that earns you points when you spend at NFL games. So, where to begin? And where to end?
How many credit cards should I have?
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The short answer: you should have at least two – ideally each from a different network (Visa, Mastercard, American Express, Discover, etc.) and each offering you different kind of rewards (cash back, miles, rewards points, etc.). How many credit cards is too many? That depends on the individual – you should never have more than you can handle.
Experts say the number of cards one should have varies according to individual and circumstance. “Generally speaking, there is no one perfect number,” said Ethan Dornhelm, a vice president at FICO.
While the number varies by generation, credit score and other factors, the average American has three credit cards and 2.4 retail store cards, according to a 2020 survey by the credit reporting agency Experian.
To ensure a mix of credit cards and keep your credit score climbing, credit expert John Ulzheimer suggests asking yourself two questions about the cards in your wallet:
Do you have cards across more than one network? If you have three cards, but all of them are Mastercards, this could be a problem if you run into a merchant who only takes Visa. An example? Costco only accepts Visa now, though you can use your Mastercard on the wholesaler’s website.
Do you have a low credit card utilization ratio? Your average balances across all your cards for the past 24 months “should represent no more than 10% of your overall credit limit,” Ulzheimer says.
Credit utilization – how much credit you’re using each month, on average, of all the credit available to you from all your cards combined – accounts for 30% of your credit score under FICO’s traditional model.
If you can add another credit card while keeping your overall spending the same, you’ll lower this ratio – and boost your score.
See related: What is a good credit utilization ratio?
Two? Twenty? The answer is personal
That former number sounds about right to John Corcoran, a hotel industry executive in Aspen, Colorado.
He’s got two for personal use – both airline mileage cards – and a third for work. He added the second mileage card solely for the points bonus, and is thinking about dropping it before the $90 annual fee comes due. “I don’t like credit cards,” he said. “I don’t like debt.”
On the other end of the spectrum is Naomi Sachs, an international business executive in San Rafael, California. Sachs estimates she has 20 or 30 cards “sitting in a sock drawer, unused” – generally retail cards she signed up for to lower the cost of a purchase at that store or credit cards she acquired for the points boost.
Sachs is carrying around in her wallet about 10 more cards, of which she uses two or three with regularity. As for cash? Maybe there’s a $20 bill in there somewhere. Debit? “I don’t put anything on debit, ever, ever,” she said.
Instead, she charges strategically, and checks her card balances a few times a week to stay on top of her finances. “I aggressively try to maximize my spend, for almost every single dollar, every single time,” she said.
Credit expert John Ulzheimer suggests two things that can help you determine the number of cards that is right for you. Always keep your overall credit card utilization low, and secure access to more than one credit card network.
While merchants in the U.S. accept the big four card networks – especially Mastercard and Visa, and, to a lesser extent, American Express and Discover – you can still find places where some of them are not accepted. Costco is one example. The warehouse club switched in 2016 from American Express as its card partner to Citi, so now the only card Costco accepts in-store is Visa.
And if you travel abroad, you should pack credit cards from a variety of card networks. While Visa and Mastercard are most universally accepted, and American Express signs are increasingly common in store windows across the globe, you will inevitably wind up in a place that doesn’t accept the type of credit card you have with you.
Beyond those two key elements, Ulzheimer explains, many approaches are valid, so long as they work for you.
See related: How to use your credit card wisely
How many cards should you have if…
Want to get more specific? Here’s a list of some particular situations you may find yourself in, and some experts’ thoughts on how that might affect what kinds of cards, and how many, you may want to carry in your wallet:
You’re new to credit cards, or just recovering from a bankruptcy or other bad credit incident
Start with one card, a secured card if necessary, then add a second card when you can prove to yourself that you are making your payments on time and paying your bill off in full each month, says Netiva Heard, a credit counselor in Chicago.
“It’s a learning period,” she said. “That’s why you start with just one card first, to get adjusted to those good habits.”
You want to take advantage of rewards programs
Cards that don’t offer rewards “are a complete waste of your time,” Heard says. She recommends thinking about what rewards would benefit you the most, and whether you want to pay an annual fee to get them.
Cards that don’t charge an annual fee generally come with lower introductory bonuses than cards that do and may not be as generous with rewards points on day-to-day spending. But be careful that you don’t sign up for more rewards cards than you can manage to juggle.
Heard advises most people to keep no more than three to five credit cards total in their wallets. Ulzheimer said two rewards cards seems like more than enough – one for airline points and one for cash back.
You plan to buy a new house or car soon
You should stick to the number of cards you already have, at least temporarily. Don’t open even one new credit card within at least six months of applying for a so-called installment loan. Opening a new card will lower your score by a few points due to the hard inquiry on your credit, “and you want it to be in the best shape possible when you go out to get that expensive loan,” Ulzheimer said.
That said, he added, installment lenders will pay the most attention to whether you’ve had a mortgage or auto loan before, if you paid it off on time and whether you tend to pay off your bills in general on time.
You want to improve your credit score
This is not a reason to get a new credit card, Ulzheimer said. “Opening a new card can actually backfire,” he said, because it will, at least initially, lower your score.
When you apply for a credit card, the issuer pulls your credit report, which triggers a hard inquiry. A hard inquiry can lower your score by five points, but it only affects your credit score for one year. After two years, the inquiry falls off your credit report. Note that applying for multiple credit cards at once can exacerbate the negative credit score impact of inquiries, at least in the short term.
A new credit card can also reduce your length of credit history, a key credit scoring factor that considers the average age of all your credit accounts. While length of credit history only counts for 15% of your FICO score, the effect can be significant if you only have one or two existing credit accounts.
On the other hand, if your new credit card has a high credit limit and you keep your balance low, the card can eventually boost your credit score by increasing your overall available credit.
debit card, or cash, Ulzheimer said.
If you need to close your credit cards to avoid using them, then do it, but know that every time you close a credit card, it can lower your score, he said – because it may reduce your available credit, thus increasing your aforementioned credit utilization ratio.
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So, whether you have two or 20 cards doesn’t really matter. What’s important is that your cards give you access to more than one network and offer you the rewards that best meet your needs (which can change over your lifetime).
And, of course, you need to be sure you’re not juggling so many cards that you can’t keep track of all the payment due dates The whole point of having two to 20 or more credit cards is earning points or cash back on your everyday spending that you pay off every month. All the while, keep your credit utilization low so that your credit score climbs.