2 Pros and 2 Cons to Having a One-Credit-Card Wallet

Credit cards are a big topic 'round these parts, and with good reason -- when used responsibly, credit cards can do a lot of good for your finances. But how many should you actually have?

Research from The Motley Fool Motley Fool Money found that the majority of Americans have just one or two credit cards. If you're wondering whether a one-card wallet is right for you, keep reading -- I'll break down the perks and drawbacks of limiting your credit card spending to a single card.

Pro No.1: Streamlining your finances

Anytime you have only one of something to manage, your life is likely to be a lot simpler than if you were managing multiple somethings. In this case, I'm talking about credit cards. To use myself as an example, I have a double-digit number of active credit cards in my name, and among those are three to five that I use weekly to charge some of my monthly bills, buy groceries, pay for dining out, and cover other expenses. It's a lot to manage, but that time spent is worth it to me to maximize my points and cash back earnings (more on this below).

With just one credit card at your disposal, you won't spend nearly as much time as I do checking credit card balances, making payments, and assessing rewards earnings. You can use your credit card for most (or all) of your expenses and watch the points or cash back roll in.

Pro No. 2: Less temptation to overspend

Having multiple credit cards could present a problem for some people -- if you have a lot of credit at your disposal, it could lead you to spend more than you can afford to pay back in a timely manner. Ideally, you're paying off credit card charges every month (unless you are using a 0% APR intro offer to finance a big purchase over time). If you're not, you're incurring interest -- and credit card interest rates are no joke.

According to the Federal Reserve Bank of St. Louis, in February 2024, the average rate on credit cards assessed interest was almost 23%. If you have to carry credit card balances forward, they can grow quickly, putting your finances into a world of hurt. Having just one credit card could make this easier to avoid.

Con No.1: Not as much reward potential

Now we come to the downsides of a one-card wallet. Remember how I said above that in any given week, I use a small handful of credit cards? Using more than one card means I can earn a decent rewards rate (points or cash back, depending on the card) on nearly everything I buy. I have a grocery rewards credit card that saved me $400 on food last year. I earn 5% back on Amazon shopping, and 3% back on other online shopping. I earn 3 points per $1 on dining out. And my base earnings rate for all credit card purchases is 1.5%, which is pretty decent.

If you elect to stick with a one-card wallet, you can avoid some of this drawback by choosing the right card. A cash back card with a solid flat-rate rewards program is one option, and you can open one paying as much as 2% across the board on all purchases. The other option is to choose a card with a fairly high base rate (like my card that pays 1.5%) that also includes bonus categories you'll spend in for a higher rate, like groceries, warehouse clubs, gas, or dining out.

Con No. 2: Risk to your credit

If you have just one credit card, you'll need to be careful about managing your spending within your credit limit (known as your credit utilization ratio). Specifically, spending more than 30% of your available credit poses a risk to your credit score -- credit utilization ratio is reflected in 30% of your FICO® Score, so it's a significant piece of the credit score puzzle.

If you have more than one card and already have a balance nearing 30% of the credit limit on one of your cards, you have the option to use a different card for another purchase. With a one-card wallet, you'll be risking your credit score if you need to continue charging on that card.

Ultimately, the choice is yours. I respect the simplicity and ease of a one-card wallet. The people in my life sometimes laugh at me for hemming and hawing when I pull out my multi-card wallet and decide which card to use for a given purchase (it's gentle laughter!). Now you have more information and can make the right call for your finances.