How Many Credit Cards Should I Have?

These days, getting by without a credit card is becoming increasingly difficult. Not only are credit cards more convenient for in-person purchases, but they also make online purchases and remote reservations possible.

Plus, many credit cards can help you make your money work for you with rewards systems that help cardholders earn points with each dollar spent. And they can also help you build and improve your credit score. Your score plays a key role in your ability to secure a number of financial products, and paying your credit card bill on time every month can help you establish a healthy credit profile.

Ninety-five percent of Canadian adults carry at least one credit card in their wallets and use it to pay for most of their purchases. Furthermore, about three-quarters of these same consumers have a credit card that offers some sort of rewards program.

The question is, should you carry more than one credit card?

How Many Credit Credits Should You Have?

The number of credit cards that are right for you may be much different than for someone else. Ultimately, the number of cards you carry should reflect how many you need to optimize your spending, as long as you’re responsible with your cards.

Credit cards come with very high-interest rates that can easily skyrocket your outstanding balance if you have a habit of failing to pay it down in full every month. But, if you pay off your entire credit card balance every billing cycle, you can avoid these sky-high rates.

If you’re able to pay off what you put on credit each month, there’s no reason not to have a variety of cards. For instance, one card might be great for paying out rewards for every dollar you spend, while another may have an excellent travel insurance package.

That said, you’ll need to keep the annual fees in mind, as many credit cards charge a fee each year. Make sure that the perks that come with each credit card make it worth paying these fees every 12 months.

Having said all that, for most people, one or two credit cards should suffice. That way, if one credit card doesn’t work for whatever reason, you’ll have another as a backup. In this case, the two cards should be from different credit card providers.

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Every eligible Candian should have a credit card not just to make spending easy and to take advantage of the perks that come with them but also to build credit. As mentioned, having and using a credit card is one of the best ways to build and improve your credit score, which will play a key role in your financial life.

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How Many Credit Cards Is Too Many?

There really is no magic number when it comes to how many credit cards are too many. As mentioned, as long as you are diligent in paying off your credit card bills every month and have weighed the annual fees against the perks that each card offers, there’s no right or wrong answer in terms of how many you should carry.

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At the end of the day, the right number of credit cards for you is a personal decision that’s dependent on your current credit score, spending habits, and financial health.

However, there are things to be mindful of when applying for multiple credit cards:

Applying for too many credit cards in a short amount of time. There are several factors that impact your credit score. Applying for several cards within a short period of time may ding your credit score for a couple of points temporarily. That’s because creditors will want to look at your credit report to verify your ability to make timely payments. Too many of these “hard inquiries” within a short period of time may not be good for your credit score.
Your ability to manage credit cards. If you are not financially disciplined to manage multiple credit cards and tend to either forget to meet payment deadlines or have a habit of racking up your balances, then you might be better off carrying just one or two cards.
Credit age is affected. Another factor that impacts credit scores is the age of credit accounts. The older an account, the better for your credit score, especially if it’s in good standing. But taking out many cards in a short period of time will effectively shorten the age of your overall credit, which may not be a good thing for your credit score over the short term.

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Pros And Cons Of Having Multiple Credit Cards

There are several perks and drawbacks to carrying multiple credit cards to consider before you start applying.

Pros

Wider variety of benefits. Different credit cards come with different perks. For instance, one may be great for offering high rewards for every dollar spent, while another may be great for insurance. Some may offer VIP perks when travelling, and others may come with a very low-interest rate. With multiple credit cards in your wallet, you’ll have a credit card for every scenario.
More buying power. If you’re ever in a situation where you need to spend more than you typically would, having a few different credit cards can provide you with more access to credit when required.
Lower credit utilization. Your credit utilization ratio is expressed as a percentage and refers to the amount of credit you use compared to the total amount of credit available to you. It is yet another factor that can impact your credit score. Generally speaking, it’s best not to spend any more than 30% of your available credit limit in order to keep your credit score healthy. If you open a new credit card account or two, you can increase your credit limit and lower your utilization ratio at the same time.
Back-up payment. While Visa and Mastercard are generally accepted just about everywhere, American Express isn’t always accepted. But what if you have a specific type of Amex that you took out because of a particular perk that it offers? If that is your only card in your wallet, you’d be out of luck if you were spending money somewhere that does not accept this type of credit. Costco, for instance, doesn’t take Amex. As such, having other cards available as a backup can help you get around that issue.

Cons

Multiple bills to manage. With many credit cards comes the need to be more diligent about managing them all. You’ll most likely have to deal with different due dates while managing a variety of statements. If you don’t have a good track record of managing your money effectively or are new to the world of credit cards, you may want to keep the number of credit cards in your possession low.
Increased temptation to spend. With several credit cards at your fingertips and thousands of dollars in available credit, it may be very tempting to go out and spend as much as your credit cards can handle. If you’re the type to overspend, then having more than one credit card may not be right for you.
Annual fees. Many credit cards usually mean many different annual fees to pay. This can add up to hundreds or even thousands of dollars that you’ll have to pay each year.

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Reasons Why You May Want To Apply For Multiple Credit Cards

Having multiple credit cards in your wallet may not be a good idea for everyone, but there are certain scenarios in which it might make sense and work in your best interests:

You’re A Frequent Traveller

If you love to travel, then you may want to add a credit card to your collection that offers rewards to be applied to flights and accommodations, a comprehensive travel insurance package, and VIP perks like free airport lounge access and concierge services.

To Take Advantage Of A Balance Transfer Offer

If you are currently carrying a balance on a high-interest credit card, you may want to look for another card that offers a much lower interest rate and a bonus balance transfer rate. This will give you the chance to move your high-interest credit card balances to a low or even zero-percent credit card for a specific period. If you can muster up enough discipline to pay off your balance during that temporary low-rate time frame, you can pay down your overall debt faster.

To Increase Your Credit Limit

As mentioned earlier, having a low credit utilization ratio is good for your credit score. And in addition to making sure that you spend no more than 30% of your entire credit limit, you can also reduce your ratio by increasing your credit limit through additional credit cards.

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To Earn Cash Back Or Rewards

You can make your money work for you by earning points for every dollar you spend. Once you’ve accumulated enough points, you can use them to redeem things like flights, hotels, gift cards, groceries, and other merchandise and services.

Additional Reading

Credit Card FAQs

Is a credit card good for emergencies?

You’d be better off tapping into another financial account in an emergency situation rather than putting an urgent expenditure on credit. That’s because if you cannot pay off that big balance by the end of the month, you’ll be charged a lot of interest, which can easily carry on month after month. Ideally, you’ll want to save a little bit of money every month to be deposited into an emergency fund in cases of urgency rather than use your credit card.

How does a credit card affect your credit score?

For the average Canadian, using a credit card is how they build a credit history and a credit score. Keeping up with payments and using around 30% of your available credit are two ways to build good credit. While missing payments and maxing out a credit card can have an adverse effect on your credit score.

How do I know if I have too many credit cards?

Some signs that you have too many credit cards include the following:

You can’t keep track of your bills
You have too much debt
You can’t get approved for new credit or loan applications because of the number of credit cards you own

Final Thoughts

If you’re financially responsible, then having multiple can be advantageous for you. You’ll have a higher credit limit, have a backup card in case one fails, and can take advantage of the different types of perks that each card comes with. Just be sure that you’ve accounted for the annual fees charged and that you’re able to manage different bills when they come in every month.

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Lisa Rennie

Lisa has been working as a writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same. She's used a variety of financial tools over the years and is currently growing her money with Wealthsimple, while stashing some capital in a liquid high-interest savings account so that she always has a financial cushion to fall back on. She's also been avidly using her Aeroplan TD credit card to collect as many Aeroplan points as possible to put towards her travels!