People carrying credit cards tend to sit in two opposing camps: those who are devout single-card-carriers, and those who carry a wallet packed with cards to stretch rewards across umpteen spending categories. But what's the right number of cards to carry, and what credit score considerations need to be taken into account?
In the previously recorded Facebook Live video below, Motley Fool analysts Nathan Hamilton and Michael Douglass answer a user-submitted question about how many credit cards people should carry.
Michael Douglass: Donny asks, "Is there such a thing as too many credit cards, even though you're able to stay below 15% utilization?"
Nathan Hamilton: It depends on how much time you're willing to give to managing your finances. I look at it as, you can have 10 credit cards and have a really good credit score, but you're going to be spending time on managing the bills. That's logging into, say, a Chase account, logging into a Bank of America account, logging into Capital One, if you carry cards across all these issuers. That takes time. So, it does take away from other parts of life. If you do find value in it, if it's something that's more of a hobby, and you like having the cards, you manage your budget well, you use a card for each category -- one for gas, one for groceries, one for other purchases to stretch your rewards -- sure. It makes sense. But I ultimately just say, how much time do you want to devote to managing your finances for your credit cards? You have to look at the downsides of it. On average, people with credit cards spend about 18% more than they would on debit. The likelihood of having many credit cards is, you're introducing complexity to your personal finances, and there's a higher likelihood of getting into debt. So, you have to balance it all out and look at it. But ultimately, if this question is more credit score related, not a huge amount, assuming you're paying on time, your utilization is low, there's not a ton of inquiries, and so forth.
Douglass: Yeah. I will say, as I mentioned earlier, we love this kind of stuff. We're here at The Motley Fool because this is the sort of hobby we would be doing in our spare time regardless. So, it's kind of cool that we get paid to do instead.
Douglass: Amen to that. But, the idea of managing more than two or three credit cards, to me, sounds totally exhausting. I only have one right now, and I'm planning to open another one at some point, but the idea of, OK, I'm at the gas station, that's this one. I'm at the grocery store, that's this one. I'm getting Thai takeout, that's this other one -- for me, that would be too much, even for me, even though I love this stuff.
Hamilton: Yeah, same here.