Brief Summary:

If you notice you tend to spend a lot more when you use plastic, don't use credit cards. If you want the majority of the benefits of using credit cards without a lot of headache, get one card. If you would like to optimize further, get a second card for specific spending areas like dining and travel. If you love the game of it, want to make this a source of ongoing rewards, then become a credit card churner and take advantage of promotions, cash like purchases, and more.

How many credit cards should you have?

The average American has 2.6 credit cards. How many cards should you have? It depends on how much effort you are willing to spend to optimize the credit card reward system and how much additional hassle you want to take on managing various cards. Let's dig in.

First, do you spend more when you use a credit card? ( Studies show you probably do. One of the most effective budgeters I've ever met puts the exact same amount of cash in her wallet every single day, and only spends what's there. Does she miss out on credit card benefits. Yes. Does she meet her financial goals? You bet. Consider zero credit cards if this approach appeals to you.

I personally use credit cards when and where they are accepted. Credit card companies charge a fee (usually 2.5% - 3.0%) to the people selling you goods, and for that fee, they do deliver some real benefits. These benefits can include things like discounts, cash back, points, price guarantees, access to limited seating for events, extended warranties, and more! In some rare circumstances, you might get a lower price for paying cash. For the rest of the time, you're better off with a credit card.

But don't use credit cards for credit. This kind of credit has ruined millions of Americans. It is expensive, snowballing, and extremely difficult to get out of. Careful when getting tempted by low interest offers - remember that you're getting yourself into a maze of repayments and timing - and one false move will skyrocket your interest rate, hurt your credit score, and leave you worse off than you began. If you want a loan, there are a lot of other opportunities available ranging from LendingClub to your local bank. If you do take on a low interest credit card, please be super vigilant about sticking to a repayment schedule.

Decide how much you want to complicate your life in the sake of optimizing credit card rewards. The majority of the benefit (roughly 70%-80% in most cases) of using credit cards comes from just having and using the first one. A second credit card might make sense if you spend a lot in one category, especially dining and travel. A third adds even less value but a lot more complexity. You can end up with a card for each category, but the incremental value of each card approaches zero pretty quickly. To see the actual quantitative results for your spend rate, check out the website

A slight upside to having more credit cards is you can split the statement dates so that you aren't drained of cash all at once every month.

So how many credit cards should you have?

0 - if you find using credit cards makes you spend more, you might be better off forgoing all rewards and NOT having credit cards. Think of my all cash friend. It's a great way to know where you are.

1 - if you want the benefits of credit cards but also want keep things simple, keep it at one and spend zero time fishing through your wallet for the right card for the job. We'll talk about one card candidates in the next post. I've almost settled here after several years of trying to optimize with more cards.

2 - if the idea of not optimizing your benefits drives you crazy, I'd suggest having no more than two cards. One straight cash back, and one rewards credit card. You should aim for a 2% or better cash back credit card, and a rewards/points card that aligns best with your spending patterns (for many people dining and travel). We'll go into which two credit cards in the next post. This is my current state.

3 or more - you love the idea of optimizing and getting free stuff. You turn credit cards into a game you can win if you play it right! I recommend hanging out at websites like for details on these strategies. The law of diminishing returns sets in pretty fast. Also, you can never really get to 100% optimization, so the game does have an end point. Finally, keep in mind it can hurt your credit score to constantly be opening and closing cards, a key part of this strategy. But if it's a game you love, then by all means get going!