Meet the credit card king with $300,000 in credit

Pete D'Arruda juggles some 25 cards and has great credit scores to show for it. But some experts warn that not everyone could use his method without getting credit rating madness.

By MSN Money Partner Jun 20, 2011 2:26PM

By Jennifer Waters, MarketWatch


MarketWatch on MSN MoneyImage: Credit card (© Corbis)Meet Pete D'Arruda: A man with 25 charge cards, more than a quarter of a million dollars in available credit -- and a lot of financial self-control.


D'Arruda says he has more than $300,000 in available credit thanks to some 25 Visas, Mastercards, and individual store, airlines and gas cards -- or about $12,000 per card. If he throws in his home-equity line of credit, it's close to $400,000.


"It's not taboo to have a bunch of credit cards," said D'Arruda, a personal finance consultant who has been building his credit trove for about five years. "It’s about how you manage them."


The founding principal of Capital Financial Advisory Group in Cary, N.C., and author of three personal-finance books is testing the more-is-better theory of credit cards: The more cards and available credit one has, the better the credit score -- assuming, of course, the bills are paid promptly.


With a FICO credit score in the 810-815 range, it's working for him. But credit-agency experts say it's unnecessary and could create a financial maelstrom for those less diligent with their money. (Do you know your credit scores? Take MSN Money's credit rating quiz and get an estimate.)


"For many people,they would end up with $350,000 in debt and that would not be a very good thing,"said Rod Griffin, director of public education for Experian.


D'Arruda charges everything from coffee to the rent for his office space on credit cards. He prides himself on his ability to manage them all and to pay them promptly, keeping himself from falling into a debt spiral.


"I like to pay my bills on time," he said. "Even though I have all those outstanding potential balances, I don't have many outstanding balances."


What he does have, he boasts, is hundreds of thousands of miles and points, numerous discounts and even freebies from retail stores and vacation spots, waived annual fees on some credit cards and better interest rates on insurance and car and home loans. Typically, the higher the credit score, the lower the interest rate. What’s more, he’s got a running tally through credit-card statements on where he’s spent money both personally and for business.


"I’m getting paid to have a good credit score," he said.


He's got a Disney Visa card from Chase -- with Buzz Lightyear on it, which entertains his daughter Carrie -- with which he’s accumulated enough points to pay for a Disney cruise this Thanksgiving. His platinum American Express card points will cover the airfare to Orlando, Fla.


Even cards with fees are a bonus for D'Arruda. He's got a Visa Black Card, a new elite card with concierge service, access to airport lounges, cash-back rewards or airfare on any airline with no blackouts. He's assessing it for a year to determine if he'll use the rewards programs enough to cover the cost of the $495 annual fee, but he got the fee waived to do so. (Find a better credit card.)


"They pulled my credit score and saw that I was a good risk," he said.


Credit scores are calculated through a complicated and proprietary algorithm of measures that differ among scoring agencies. However, there are three major pieces of your credit-score picture that all follow to closely.


The most important: Your bill-paying history. It will account for as much as 35% of your total score. Pay all your bills on time. Even if it’s just the minimum payment, make sure that bill is marked "paid" on the designated date -- or sooner. D'Arruda said he sometimes makes two payments a month to keep his balances in order. (How long will it take you to pay off your credit cards? Check MSN Money's calculator.)


Next up is what credit-ratings agencies call the "utilization rate," or your debt-to-available-credit ratio. D'Arruda, who said his typically stands at about 10% to 15% and no more than 25%, began this credit-building experiment based on the simple notion that your credit score is mostly determined by the amount of available credit subtracted by the amount outstanding.


It's a fussier method than that, but your utilization rate is worth some 30% of your score. Creditors don't want to see the ratio over 30% and consider it an important link to your financial acumen and any lifestyle changes you may be facing. Article continues after video.

"You don’t need a lot of credit cards to have a good utilization rate," said Barry Paperno, consumer operations manager for, the consumer arm of credit-scorer FICO. "And obtaining 25 credit cards for your score is overkill. Utilization looks at percentages more than dollars."


Consider it this way: If you have $300,000 in available credit and carried a $30,000 balance, your utilization rate is 10%; if the available credit stands at $3,000 and you charged $300, your utilization rate is the same.


What you must have are credit limits that meet your charging needs, said Steven Katz, senior director of operations for TransUnion, the credit- and information-management company: "You may need a smaller number of cards with higher limits or more cards with smaller limits to stay under that 30% utilization rate."


Don't max out one card over another either in order to keep the utilization rates under 30%, he added. If you take out a store credit card with a $5,000 limit and you charge $4,750 for a home-theater system, your utilization rate on that card will set off alarms.


"It’s a good idea to try to keep the balance on each card under 30% of the limit," Katz said. "It will help guide your efforts to keep your overall credit use low."


A perfect score is near impossible to get, and having credit but not using it won't get you there. That's doesn’t mean that you have to carry a balance that you must then pay interest fees on each month. You just need to use the card and pay it off to maximize your credit score.


"The ideal place to be is under a 10% utilization rate but over 0%," FICO’s Paperno said. "There needs to be some kind of recent activity" to activate a score.


Your credit mix and history contribute about 15% to your score. Creditors like to see how you handle revolving credit, or credit cards, and installment loans, like mortgages and car and student loans. They average the age of the accounts divided by the number of accounts. Surprisingly, income doesn't play a very significant part of the credit score.


D'Arruda had a long credit history before he started on this venture and said he was cautious about how much credit he applied for when. That’s because your score gets dinged each time it's checked for new credit. Applying for too much credit at once has creditors worried that you're in a financial bind and getting ready to rely on credit you might not pay back.


New accounts opened also impact your score by about 10% for much of the same reason. "Taking on new credit has shown to indicate a higher level of risk," Paperno said. "People who go into default tend to have added new credit more recent than those who haven't."


D'Arruda admits he started collecting credit cards as a personal challenge to see how many he could get before he got cut off. The limits on each card vary, of course, and he’s even got an American Express that has no limit, though he’s not willing to test what that might mean.


"This is a lesson in discipline," he said. "When you get the credit card, it's like free money. You have to manage them well. It all comes down to not overspending because it's not your money."


And he said he only chooses cards that will help him with points, miles, cash back and other perks. He likes the 30% discounts he gets at Kohl's, for example, and the special sales offered only to Home Depot and Best Buy cardholders. He's a big fan of the Capital One card because it offers double miles.


His tool for limiting credit-card abuse? A metal money clip. It only holds five cards at a time, which helps him to monitor spending.


"You've got to treat it like cash," he said. "You have to pay it back and if you do it wrong, you have to pay a whole bunch more back."


More on MarketWatch and MSN Money:



Jun 26, 2011 3:55PM
Um...what would Dave Ramsey say? "YOU IDIOT!!!" Thank God we took Financial Peace University, that heap of bondage that man is talking about is why America is in the "financial" shape it's in! Eventually it'll catch up with always does with a fool. It's sad that this article is "praising" him...what is America coming too? This is pathetic, a shame, all of our credit cards are paid OFF! And as far as the "great FICO" we don't care b/c owning no man is better than a score based on how well you can "manage" debt. We don't "manage" debt we "pay" debt off. I would insist on anyone who is serious about getting out of debt to go to & find a class near you. It changed our lives. Remember "If you live like no one else then you can LIVE like NO ONE else"-Dave Ramsey.
Jun 26, 2011 3:55PM
I have 2 credit cards and a FICO score of 805. He is just giving himself a lot more chances for ID theft. Taking a lot of risk for an experiment.
Jun 26, 2011 3:36PM

Pete D'Arruda is an idiot and so is anyone else carrying that many credit cards! The brainwashed sheeple unable to think for themselves will believe anything their masters tell them. Get a life, get a clue and get a brain sheeple! Sick


If you were told that cyanide was healthy for you, would you consume it? I'm sure many of you would. So many morons in this world. Unbelievable! Eye-rolling

Jun 26, 2011 4:18PM
Totally agree with Stephen!  Playing with credit is like playing with snakes!  I would rather pay with cash then deal with credit because I played with fire in my early 20's and 10 years later, I'm STILL cleaning up that mess.  Hey, there might be some people that have the discipline to not abuse their cards but it's a proven fact that you're going to spend more when you use plastic instead of using straight up cash.  At least check out Dave Ramsey if you're interested in learning how to live debt free and not having to worship at the altar of the great FICO.  Gonna take me about 2 years, but I'm on my way to being completely debt free in 2012 after paying off $40k plus in debt! Cash is King!
Jun 26, 2011 4:36PM
@ RickyT-
Debt free is good as I have never had a credit card, car loan, or any other major purchase on credit and I am 38.  And right now I am regretting it, because I am getting declined on a car loan because of "insufficient credit history"...  Gee, that's really just great! I pay cash for everything and I because I don't have untold dollars in credit balances I get denied?!  I've been told it's better to have a bankruptcy on your record than it is to be in my situation...  Awesome.. not, I guess that's the American way...  
Jun 26, 2011 4:27PM
Wow.....25 cards and a score of 810-815. I have 1 card and an 852 score. I used to have low card rates until years ago when I decided to pay my debt off and owe no interest. Now the card companies jack the rates up hoping I'll miss a payment so they'll get theirs. The sad part is most people are in the "I want it now" mode and are living way over their heads, whipping out that little card to get what they want. The card companies love that. How do you suppose they got so big eh?
Jun 26, 2011 3:40PM

Don't even think about doing this to improve your FICO! It is playing with fire.

 My wife and I have one card each, and our scores are 800.

Jun 26, 2011 3:59PM

Exactly Fred, just pay any bills you have on time and watch your FICO go up.  The key to a great FICO is not how you use your credit, but how timely you are with paying on your debt/payments.  Have a history of good payments (4+ years) and you can have an 800+ FICO (especially if you own a house).

Jun 26, 2011 3:49PM

I consider myself very fortunate in that at 74 years old, I have 4 credit cards that literally beg me to borrow a total of $50,000 at 0% interest for up to a year. The fee for charging on those cards if they are used to borrow at that rate is 4% of the total charged. If I do charge, I immediately set up an automatic draw from my checking account ensuring that I am never late and there are no chances of paying a penalty or excessive % for failing to pay on time.

Jun 26, 2011 4:02PM
I like this guy.  I own my creditors and I treat them that way trying to build up as many freaking miles as possible that I can turn into cash to then invest into my online brokerage account.  Since I get reimbursed for my gas through work I especially try to work the system.  I only own 5 credit cards though and I haven't had to pay an interest payment since 1998 since I run a $0 outstanding balance every month and my credit is outstanding.  I also avoid impulse spending like the plague and I'm a minimalist. I would never take out 25 credit cards like this guy though.
Jun 26, 2011 5:50PM

Gee I got 20 cards to keep business and personal separate, have a limit of 250K and didn't even ask for it. 850's score and no annual fees, all my cards are less than 10% APR....

Guess I'm not impressed.

Oh and I don't work anymore.

Jun 26, 2011 5:49PM



the highest possible FICO score is 850     why do people attempt to look better then they really are.   It's funny how folks can't handle the truth.

Jun 26, 2011 9:44PM

I don't think $300K qualifies as "king." For years, during the 90s and through about 2006, I executed a series of transactions on credit cards taking advantage of balance transer offers at 0% so that I could bank the proceeds, collect the interest, and pay it all back at the end. At one point, I had more than $100,000 in debt, with corresponding cash balances in FDIC-insuread accounts. Today's balance transfer offers aren't anywhere as lucrative, often with fees that destroy any chance of getting free money. However, I have collected a drawerfull of cards and have available credit probably close to $400K. The best deals today consist of discounts for specific intervals. Discover and the Chase 'Freedom' card each offer quarterly promotions for 5% off of certain categories of purchases, and my Amex card offers 3% off gas and restaurants all the time.


it all started when I transferred a car loan to a credit card in 1995, converting a 3.9% secured debt into a 0.9%-for-the-life-of-the-balance unsecured debt.


Credit arbitrage is a lifestyle that requires enormous discipline, since it would be really easy to end up with crushing debt. But if you can control your spending even with enormous credit available, you can pocket or save thousands of dolalrs every year.


Simple thinkers are not able to understand that there may well be a method in what appears madness.  This fella has in place a safety net for terrible times;    if short term difficulties were to occur,  he has immediate  resources to carry him thru,  If,  heaven forbid he was dealt a catastrophic  blow such as a major long term illness,  and only able to pay the minimums until maxing out his credit,  he would realize about 250K of income.  My assessment is strictly one of crisis management,  not a moral compass;  I'll allow others to determine how this scheme stacks up against credit card agencies practices.

Jun 26, 2011 6:39PM
By accepting a credit card loan you need to put yourself in the loaner's posistion to understand their risk...that's what we pay for nowadays....everyone's mistakes including the loaners' that of human behavior, our APR, by accepting one. We all pay the price for the need. Self-control like patience is a virtue and the house calls the shots. You play you pay...............nobodys' bating average is over .400 so accept the risk and pay the price......this country 's built on credit  thank god for those in to an outside of it and see what happens.....nothing's free except death and taxes......appreciate the freedom to do business.....only in this great country !
Jun 26, 2011 5:16PM
This guy is the King?  I have at least 47 credit cards, am debt free, and have about $400+ in credit.  My FICO score, depending whom you ask is in the 790 to mid 800's.  Credit cards are tools, not toys.  Like fire, they can be harnessed to your advantage, but playing with them can kill or maim you. I only charge what I can afford to pay at the end of the month, carry no balances, pay no finance charges, and rotate their use so each one gets used at least once a year.  All of my cards are no annual fee either.  The banks actually pay me to have their business in rewards and rebates( I usually get a free tank of gas each month from one of my gas cards).  Having good credit opens doors to home loans, apartments, car loans,  car rentals, anything you need to be trusted financially for.  It is a trust not to be broken made between you and the banks, and it is THEIR money on loan, not free or play money. Finally, the advantage of being able to dispute any charge and not pay a manufacturer or merchant that is being unreasonable until the issue is resolved is, in my opinion, "priceless".  Try doing that with cash.
Jun 26, 2011 5:04PM
you dont need to go this route you just need to pay everything on time or early...I have one card and my score is 872
Jun 26, 2011 3:22PM

I have more credit than him with credit score above 840...what is the big deal?


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