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How Many Credit Cards Do You Really Need?

There's a balance between taking advantage of rewards, and overloading your wallet with unused plastic that may cost you in the end.
how many credit cards do you need

Credit cards have been bad news for debtors since their inception around the turn of the century. But they're not evil! They can even be used in responsible ways to earn cardholders money. Using credit cards correctly starts with paying them off in full each month, and it's crucial to know and utilize credit card rewards. But no one wants a wallet full of unused plastic.

So the question remains: How many credit cards does the average person need? As it turns out, just two. (And even less for college students and young people.) Pare down the credit cards you carry to just a couple and you'll enjoy more rewards than ever. Here's why.

Empty Your Wallet

Consumer Reports conducted a study in August 2013 that showed using two different credit cards (as opposed to one or many) can make a huge impact on the amount of rewards dollars you earn annually. If you stick to just one trusty piece of plastic, you're potentially leaving hundreds of dollars in rewards on the table every year. Likewise, if you have more than two major credit cards in play, there's a strong chance you aren't using them appropriately.

For instance, if you have a big family with a big grocery budget, using a 1% cash back card is foolish. If instead you were to grab the American Express Blue Cash Preferred Card, for example, you could be earning 6% back on each trip to the grocery store and 3% back on gas as you haul those kiddos around, on top of the perks of signing up — a $100 credit and a free year of Amazon Prime.

For those other purchases that don't involve groceries and fuel, the Fidelity Rewards American Express Card offers a 2% return on every purchase you make and sticks it in a retirement, brokerage, cash management, or 529 college savings account for you. It happens that the 2% flat rate is the highest flat rate card around! Plus you'll be putting aside those rewards dollars for long-term use instead of just crediting your bill. Surely 30 years later you'll be shocked at how much more you have in retirement just because you chose to use this credit card.

Alternatives to Cash Back Credit Cards

For most ordinary folks, cash back cards are the best bet. But if you do a lot of traveling, the two cards that offer the best rewards according to Consumer Reports are the Barclay Arrival World MasterCard (with double points) and the PenFed Premium Travel Rewards American Express. Keep in mind, though, that to make these cards work for you, you'll need to be spending about $3,000 per month on travel-related items every month. For more info on the best credit cards for travel, check out our guide here.

The credit card rewards scene can be a difficult one to navigate. And if you have seven or eight cards, it's really easy to not use them appropriately. You might have an airline card with an annual fee that isn't paying dividends because of your lack of jet setting. You might also be using the wrong card in the wrong situation and therefore be foregoing your maximum rewards potential. That's why finding the two most valuable cards for your specific spending habits is key.

Finding the Right Credit Cards

Credit Card Tune Up is a free resource that will help you select the best credit cards for your lifestyle. It's not the prettiest website out there, but it gets the job done. Take a look at your average monthly spending and plug it into their trusty calculator to find out the credit card combo specifically catered to your spending. Keep those two handy in your wallet and take the remainder of your plastic and stick 'em in the back of a dresser drawer. You don't want to close these accounts — that could hurt your credit score — but you don't want rely on these cards if they're not best suited to your spending habits.

From AmEx to MasterCard and beyond, do you have a favorite credit card or two? Let us know in the comments below!

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Contributing Writer

Joel Larsgaard loves helping people focus on frugality without giving up the things they enjoy. By day he's a radio/web producer for the Clark Howard Show, and his blog Save Outside the Box is his main avenue to disseminate his money meanderings.
DealNews may be compensated by companies mentioned in this article. Please note that, although prices sometimes fluctuate or expire unexpectedly, all products and deals mentioned in this feature were available at the lowest total price we could find at the time of publication (unless otherwise specified).
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Credit cards may be a trap. Each card you have lowers your credit score and the debt compounds rapidly if you pay minimum payment. Not exactly a credit card, but a good example of interest rates. I bought a computer from Radio Shack while in college for $2000. I paid their minimal payment for ~3-4 years. Once I got a job, I paid my account in full and I think I paid close to $3000.

I use my cc as a debit card. I only buy with it what I can pay in a month. I use it for most my purchases, as I get rewards points. And pay it in full at the end of the month, as most below me in the comment section. I have another cc, as back up, but I have not used it in years. Both my cc have no annual fee. There is no reason to get one with an annual fee. If you do, talk to their customer service unit. Tell them "this ___________ card provides no annual fee". They may waive your annual fee to keep you as a customer. If not cut it and get the one without annual fee.
Oh btw, I never pay any annual fees on my CCs (around 10), except my Costco /Amex, which is actually my Costco annual membership fee. Every other CCs...none. I have no recurring balances on any of them. I charge a few CCs of very negligible amounts, just to show some activity to the CC bank lenders. $0 balances since I pay them FULLY at each month.

oh wow... how much did you spend with that card...??
Love, love,love my CHASE FREEDOM CREDIT CARD. Earned enough last year for a free mini apple iPad for myself. A free nexus android for my son and another free tablet for my husband. Save the rewards all year and Christmas is taken care of. And they have the best customer service. Love you CHASE
Lindsay Sakraida (DealNews)
@Mael Interesting idea!
Often overlooked: A lot of extra points can be earned on many cards if you shop on-line. These cards have shopping portals, member malls or whatever they call them. You go on-line to your credit card account, look for the shopping link, and access the "mall". You can get extra points or special coupons by using the link for a store you want to shop at. For instance at Discover or Chase, you could shop at and earn 5% points for your on-line purchase. Just make sure to do your checkout on the original link from your card mall. Extra points can range from 2% even up to 20% for an occasional retailer depending on the credit card. It can take a few extra minutes to check which card works for which stores and has the best rewards, but those points add up fast! Like the article says, you probably only need 2 cards (or maybe 3) to get the best savings.
It might be interesting to run a survey to see how many cards Dealnews readers have and of what kind. I personally have no cards that allow me to carry a balance. Instead I use an AmEx and a Visa debit card.

In terms of rewards, the AmEx is definitely not the best - I believe it's 1% on everything with a hefty annual fee. Probably time to change to something else but I've had it long enough that I am kind of attached to it.
Just pay for what you can afford. Having a credit card can actually give you savings in rewards/cashback.

If you maintain your budget with your credit card, you will actually come out on top.

I try to charge everything and I pay it off every month. Combine that with the proper percentage in credit usage, you can accumulate a good credit score, which in turns save you money when buying a house, a car, a yacht.

Just sayin yo.
Best credit card is no credit card. But it's hard to ignore its convenience.

We are trying to limit its usage for monthly bills only (water, elect, gas, insurance etc..) and try to use cash for grocery & shopping to control budgets.

Once you start to pile up credit charges, it's really hard to control them.
I have all 4 types of CCs: Discover, AX, MC and Visa, and none of them has annual fee, and I paid them off in full each month.
I have quite a few (around 10), with very high credit lines. If I do use any of those (very negligible balances vs the very high credit lines), I pay it all IN FULL EVERY MONTH. I NEVER pay any interest at all. NEVER. I keep them all active, at least some activity, at least one month, in a year. If I have transfer balances (only use 0% with 2, 3, or 5% transaction fee), I use it very wisely for important matters and pay it off again, IN FULL when the 0% offer expires. Credit cards are bad, if you do not know how to use them wisely.
I forgot to mention what ski522 mentioned regarding the AmEx card. I never plan to have a card that charges an annual fee. More than 99% of my purchases are via credit card, so they get plenty of money from all the transaction fees, I have no desire to pay them an annual fee on top of that.
I signed up for two Chase SouthWest cards this year and have already earned my companion pass (an assigned person flies free with me until EOY 2015) because they offered 50,000 points for spending $2,000 in the first 3 months. Both cards have annual fees ($170 combined) but with the miles I earned and assuming I always take my companion that is 8 round trip flights in the US for $170.
I have many credit cards... I use my Discover mostly, then my AARP Chase Visa (yes, I am 26 and use AARP's Visa for benefits that compliment my Discover) and I have another (Capital One) Visa that have no rewards, but I keep it because it was the starter card I got when I turned 18 to build credit. The long history of the card is beneficial to my credit, even though it is only a measly $1k credit limit. I also have a few store cards that I only got as a teenager to help friends that worked in retail (the store managers were able to trick my 18-year-old self into thinking those cards did not effect credit - I soon learned that was a lie) but I kept the cards due to history and I have gradually been increasing the credit limits to increase over credit. I've always paid my cards off in full, aside for a couple months several years ago during financial problems, but paid well over minimum limit. The credit cards were a major reason why I have a credit score of 815 :)
Great article!!
The AX card has a $75 annual fee and grocery purchases are limited to only $6K. For home DIY people I do recommend the Lowes CC as you get 5% discount on every purchase. I'll also use various store brand cards (bestbuy, HD, Walmart, Billmelater) when I can get 6, 12, or 18 month large purchase price item interest fee (might as well use their money to fund a high dollar purchase), just make sure you pay it back before the promotional period, or you get screwed with back interest. My card of choice though for everyday use is Capital One Quicksilver which is giving me 1.5% cash back, no strings attached, no annual fees...and I got $100 just for signing up!