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How Many Credit Cards Should You Carry?

By Nathan Hamilton and Michael Douglass - Apr 5, 2017 at 1:14PM

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Is your wallet packed full of cards?

There are two camps when it comes to credit cardholders: people who keep a wallet packed full of cards to optimize rewards across spending categories, and those who prefer a slimmed-down approach and carry a single, go-to card. Both approaches have their merits and potential downfalls. That's why it's not surprising many cardholders ask about the ideal number of credit cards to carry.

In the previously recorded Facebook Live video segment below, Motley Fool analysts Nathan Hamilton and Michael Douglass answer a user-submitted question about how many credit cards to carry.

This video was recorded on March 29, 2017.

Michael Douglass: Shahid asks: "How many cards do you recommend to have overall?" And, of course, the first answer is "It really just depends on you a little bit." I'm sorry. We're just going to keep saying this, but like, I, for example, only have one credit card, although I'm planning to open a second one sometime in the next year or so.

Nathan Hamilton: I, on average, carry about two, maybe three credit cards, but how I break it down and perhaps what may be relevant for people is, as you mentioned before, look at your budget numbers and figure out what are the top one to two categories, and get a card that has a high cash-back rate for those categories. Then for everything else, maybe that additional card you have that earns cash back. Just don't worry about the bonus category purchases and managing all stretching rewards to try and optimize. Just look at what's the biggest portion of your budget, get a card that fits for that, and then find perhaps another card that's a Swiss army knife for the rest.

Douglass: That totally makes sense. I remember talking this over with some friends a few years back when I was first getting my first credit card. I was like, "There's this gas credit card," and my friend was like, "Listen, you spend..." I live in the D.C. area so, "You spend like $80 a month on gas. Really? Are you really going to try to get 3% back on that with this special credit card that you only use in that case? You're going to try to get 10% back on this one thing that you spend $100 a month on?" Just look for the big, broad categories. Start with a couple and kind of see what works from there.

Hamilton: What I'd also say in regard to that question is, how much time do you want to give to manage in your finances? Because every additional card you add to your wallet, I view it as that is another opportunity to possibly complicate your finances, and perhaps get deeper into debt.

If that is the result, I would argue for one credit card, but if you're better at managing your finances, if you give it a little bit of time outside of work, your free time or follow your finances closely, two to three cards can make sense, and you can generate some pretty nice rewards.

Douglass: We at The Motley Fool basically love doing all this stuff outside work. That's pretty much why we're here because these...

Hamilton: We're finance dorks.

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