Credit Cards: How Many is Too Many?

When one considers all of the variables regarding credit cards, the single variable that has to be least represented is the variable regarding number. In other words, when a person considers all of the different aspects of their credit cards, the one aspect that they really do not pay attention to is the number of credit cards that they have.

This is something that is true for any credit card market, but it holds special significance for the Australian credit card market because of the fact that so many people use their rewards to travel on a frequent basis. More credit cards will dilute the effectiveness of each reward program and that in turn decreases the amount that you can go based on that specific credit card program.

Single People and Credit Cards

There are far too many variables involved to give specifics regarding optimal numbers of credit cards in an overall average because there are so many different factors that serve to make cases unique. However, if we use a couple of arbitrary category definitions to group similar people together, that makes a generalization a lot easier to make.

Take a single person for example. The most common single person is Australia is someone that is under the age of 30. A young person with some sort of education and some sort of job, making the average income within the country is the ideal model for generalization. This person will have a lot of necessary expenses eating up the majority of their income and after savings there will not be a lot left for spending. However, the good news is that since credit cards are accepted all over Australia, a large amount of the necessary expenses (i.e. phone bills) can be put on the credit card, allowing this person to accrue the benefits.

Even with this in mind however, this average single person will not be spending that much money on their credit card unless they go beyond financial security and start accruing debt. Assuming they don’t do that lightly, they should keep their credit card numbers as low as possible. Any more than two or three credit cards would severely start to eat into the real benefits they’d get from the reward programs and if they are planning to use those rewards to travel, even cutting things down to one credit card might be the best thing to do.

Married Couples and Credit Cards

Married couples on the other hand are quite different in nature. While age distinctions are almost useless in this category, there is an important difference between married couples without children and married couples with children.

In the first category, there is not that much that is different in the case of the married couple and the statistics for the single person multiplied by two. While married couples might have joint purchases that exceed that of two single people, many of these purchases will have absolutely nothing to do with credit cards (i.e. a mortgage will be a wholly separate credit arrangement).

If the married couple has children on the other hand, they will make a number of purchases for the children for entertainment, clothing and food purposes that could be put on the credit card. This will serve to increase the amount of money they spend on credit cards, thereby allowing them to accrue more rewards. This allows them to get more credit cards and spread the rewards out to many different things or to keep just one or two and concentrate them. While nobody but you can decide if this is the appropriate situation, it is worthwhile to note that a family that does all of their credit spending on a single travel rewards card is a family that will be able to take vacations with relative frequency.

Conclusion

While many people initially think that more credit cards is a good thing, the more accurate conclusion to draw from the above case studies referencing average circumstances amongst Australian singles and families is that a lower number is better. Not only is it better for the reward concentration reasons mentioned above, but it also allows you the chance to obtain greater credit in the forms of other loans should future need arise.

Mike manages an Australian credit card application site, Credit Card Finder. Visit our section on no fee credit cards if you feel you own too many credit cards already.