How many Credit Cards should I have?

Have you asked, “How Many Credit Cards should I have?” Look no further! In this post, we’ll also talk about how they can best be utilized to support your family.

Essentials – How Many Credit Cards Should I Have?

Major schools of thought for credit cards include a range from excessive use to cutting them up and totally avoiding them. I’ll say right up front if you are struggling with a budget and under a heavy load of credit card debt then I recommend you pay off that balance first! With the understanding that credit cards are not for everyone, I think there are ways to use them in support of your family’s goals and financial profile.

According to Experian, as of Q3 2020, the average American held 3.84 credit card accounts. I find the number of cards is less important than responsible use and healthy financial practices.

As a general statement, I find that approximately 3 credit cards work well to augment a financially balanced and disciplined household. One credit card for daily expenses, one for travel, and one for dedicated areas based on your unique financial profile.

Regardless, make sure you are careful! I would also encourage you to take it slow. Don’t go out and apply for a bunch of cards in a row; make sure you have a regular pattern of spending before applying. Also, remember that frequently opening and closing credit cards will impact your credit score.

At the end of the day, I recommend you plan to pay off the balances in full each statement period, know what your fees are, and keep an eye on the transactions. Used properly, credit cards can enhance your financial quality of life.

Are Credit Cards Bad?

Like most financial tools, there certainly are great benefits to harvest from the responsible use of credit cards. However, warnings and caution balance those benefits. Make sure you are financially balanced and disciplined – keep yourself from falling into credit card debt. 

Should you Avoid Credit Cards?

My friend, let me be frank – if you are prone to overspending and/or already wrestling with credit card debt then my recommendation and opinion is that you should completely avoid credit cards. To a certain extent, no amount of points (even after you pay off current credit card debt) can make up for the extremely high-interest rates and historical damage.

I want to support your financial journey and recommend you be honest with yourself. Please, be careful, and do not take self-evaluation lightly. Consult with a trusted financial advisor and see if credit card use makes sense for your situation.

“Sleep Test”

The number of credit cards will be different on a case-by-case basis. In order to avoid financial struggles, good habits, and for better peace of mind I recommend paying them off in full and on time each month.

You might have the excellent financial discipline and do not want to deal with credit cards for other reasons. If this is you, then I encourage you to own it and stick with your plan. Credit cards are not for everyone and that is ok!

How many Credit Cards should you have?

Let’s take a look at some categories that we have matched with a credit card. Please consider these as an example, and make sure you do your own research and homework to find the best pairings for your family. 

As you investigate your options, I highly recommend you take the time to understand what the annual fee and fee structure looks like. Make sure you know what you’re on the hook for, and have an idea of how much you’ll be using that particular card. This is where a solid budget comes into play – use it to figure out if the annual fee will be offset by the points or benefits you’ll be using.

Here are the 3 categories for which we have assigned a credit card:

Credit Cards for Routine Essentials

While it wasn’t always the case, my wife and I find that a “daily use” credit card offers us some competitive benefits. We use it on items like food, gas, and clothing. As those staple items are always present in the budget we like to collect these points as cash-back which we then like to use on holiday and birthday shopping. By far, this is the one we use the most.

As an example, we found both the Alliant Cashback Visa Signature Credit Card and Discover it Cash Back Credit Card to be good fits for us! 

Credit Cards for Travel and Restaurants

Travel and vacation can be expensive! We have found certain credit cards to be very helpful in trimming that cost so we can make traveling more of a reality. We reserve this card for airlines and restaurants. Even during the pandemic, we continued to sock-away these points for later use (can’t wait for that trip!)

For this category, we have drawn benefits from the Southwest Rapid Rewards Credit Card. There are others for your favorite airline, so make sure and shop this around to see what works best for you and your need.

Credit Cards for “Extras”

In general, I do not recommend the department store approach of signing up for credit cards in the checkout lane. I believe there are better credit card benefits found in dedicated cash-back and/or airline points. 

Aside from that, I recommend cards in this area be held for the specific perks or benefits associated with one’s lifestyle. This could be something where you need a credit card for work or one that provides a benefit for a specific need not previously covered or addressed in the first two categories.

One option that has worked well for us is the Apple Card which saves us on Apple purchases and has saved us some cash with recent purchases as well as pairing nicely with our online experience. Other options in this section (which I have not yet reviewed) include American Express.

Best of luck on your financial journey, my friend! Remember to avoid credit card debt, manage them responsibly, and as always, keep cultivating Mêtis in your Money Matters!