Why This YouTube Millionaire Carried 11 Credit Cards

If you have a plan, there may be no limit on the number of credit cards you should keep.

Back in 2018, YouTube millionaire Graham Stephan decided to add a new credit card to his wallet full of credit cards. In fact, it was his 11th. While that may sound excessive, Stephan's reasons for doing so are fairly ingenious.

All about the plan

Stephan says he took on that 11th credit card because it offered 100,000 rewards points to users who spent at least $5,000 within the first three months. For Stephan, dropping five grand was a breeze. One of the homes he owns needed a new roof and Stephan told the contractor he would put the first $5,000 of the bill on the new credit card and pay cash for the rest. Then, when the bill was due, he paid it off in full.

In fact, that's why Stephen can't see a downside to having so many credit cards: He pays every balance off in full each month and never carries a balance. In other words, he collects rewards points and never pays a cent of interest.

Once he paid that $5,000 bill off in full, Stephan found himself with 390,000 rewards points -- 100,000 from the new card and 290,000 points he'd collected from other credit card rewards programs. According to the young entrepreneur, 390,000 points was enough to pay for 15 round-trip airline tickets anywhere in North America, as well as a week's vacation.

Cards with annual fees rightfully bug him

Of the 11 cards Stephan had in 2018, only one carried an annual fee. That credit card company charges $25 per year, a charge Stephan finds ridiculous and says he would never pay again. But, since it's one of his oldest cards, he would never consider canceling it.

Why? Because a factor called "length of credit history" accounts for 15% of his FICO® credit score. The longer a person has handled credit, the higher that portion of their score.

Having 11 credit cards is fine for him

Given the way he handles his credit, Stephan sees no downside in the number of cards he carries. Here are three of his reasons why:

1. Amounts owed

Sometimes referred to as "utilization ratio," this piece of a person's FICO® Score compares how much credit a person has available to how much they actually use. For example:

• Person A has two credit cards, each with a $5,000 spending limit. Person A owes $5,000 on one card and $2,000 on the other, for a total of $7,000. That means Person A is utilizing 70% of their available credit ($7,000 ÷ $10,000 = 0.70).
• Person B has five credit cards, each with a $5,000 spending limit. Person B also owes $5,000 on one card and $2,000 on another, for a total of $7,000. However, Person B is only utilizing 28% of their available credit ($7,000 ÷ $25,000 = 0.28).

The lower a person can keep the amounts owed, the better their credit score. Amounts owed accounts for 30% of a FICO® Score.

2. Payment history

As mentioned, Stephan pays his credit cards off in full each month, and that's a smart move in terms of his credit score. Payment history is worth 35% of a FICO® Score. Stephan admits that he only uses two of his cards regularly, but he's serious about making sure they're paid in full. And to make sure a payment never slips through the cracks, he has his cards set up on automatic payments.

3. Money he would have spent anyway

Graham says it makes no sense to take a credit card, then find things to charge to it. He only uses a card on purchases he would have to make whether he was using a card or not. The roof is a great example. And once a card has been used, he's sure to pay it off before the next billing cycle.

A couple words of warning

It's easy to slip into debt. For example, you may have every intention of paying a credit card off at the end of the billing cycle, but then your car breaks down or you have to travel out of town for an emergency. Unless you're absolutely sure you can pay credit cards off each month, collecting them may not be a great idea -- particularly if you find yourself taking a cash advance from one credit card to pay another.

Also, while Graham says he only uses two of his cards regularly, all credit card holders should make a habit of using each card at least once every three to six months to keep them active. For some, that means making a small purchase, logging onto the credit card website, and paying it off in full. Credit card companies have the right to cancel a card for inactivity. And once a credit card is canceled for inactivity, that one less pot of available credit to boost a borrower's utilization ratio.

No matter how many credit cards you carry, the goal is to have a plan for squeezing every last benefit out of them without allowing them to squeeze you.