Credit Cards: How Many Is Too Many?

having a credit card, credit card, credit card limit

I have a great uncle who has 17 credit cards. I have one. Like a true story, the right answer lies somewhere in-between. I’ve written quite a lot about credit cards for various publications. I’ve come to some conclusions. In order to maximize perks, a person should have a 1:1 ratio of one credit card per major expense. Why? It’s because you want the most rewards per spending category.

There are some fantastic all around credit cards. This means, most people don’t really have to get 1 credit card per expense category. However, it’s a good way of making sure you’re getting good rewards. Here’s what it looks like:

Expense: Groceries
Card with best rewards: xyz
Expense: Fuel
Fuel Card: xyz
Expense: Travel
Travel Card: xyz

I believe this is a powerful way to manage credit cards. You get the most bang for the buck. Who doesn’t want to get great rewards in each spending category? No one. Free money is sometimes the most fun to receive. It’s like receiving a present each time you reap the rewards.

The Trouble with Having Too Many Credit Cards

Most people sign up for too many credit cards. The first reason is because just applying for a credit card dings your score by 3-5 points. If you have 17 cards like my uncle, your credit will have taken a 68 point hit! That’s major! That could be the difference between having an excellent credit and having a mediocre ‘good’ score.

It’s also just plain hard to manage that amount of plastic. Each card has a unique answer to each question:

What’s the customer service support number?
When is the bill due each month?
What’s the interest rate?
What kind of rewards does this card have?
When will it expire if I stop using it?

It’s a lot to remember. It’s also just hard to remember you own that amount of cards. I imagine the emails you’d get would be overwhelming. I’m great with email management but even I think that would be a little crazy.

The Trouble with Having Too Few Credit Cards

Right now I only have 1 credit card. There is a problem with that. For me, it’s just a minor problem right now. I don’t spend much. I also don’t have many spending categories. This means my Discover it card does pretty well. But I will apply for another card soon. I applied for my first credit card (the Discover it) back in March. I wanted to give it a few cycles before I went after another. After all, I don’t want my credit damaged if I’m not approved.

Additionally, I like having store specific cards as well. I use my Victoria Secret credit card like clockwork every month…what can I say? I’m an addict. I routinely check my victoria secret credit card login to see the rewards I’m receiving based on all of my spend. It only reaffirms my thoughts that having too few credit cards is detrimental as well.

Hitting the Sweet Spot

List out all your expenses as illustrated above. Next, do the research necessary to find the best card for each situation. Again, if one card is great for fuel AND groceries, feel free to use just one card for both. You’ll want to find those kinds of cards anyway. Makes things easier.
Good luck hitting the credit card sweet spot. It will take you about one long Saturday morning to complete. Here are some valuable resources to help your selection:

The Simple Dollar

Credit Card Insider

Nerd Wallet

Credit Karma

Finally, to continue the discussion here is a handy little video from thepointsguy – he has about 25 credit cards and gives several reccomendations for which ones you should apply for first.