How Many Credit Cards Should You Have?

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how many credit cards should I have

Have you ever wondered: how many credit cards should I have? It’s a good question, but there’s no easy answer: it’s impossible to say exactly how many credit cards you should have since there are different considerations for every individual. But the short answer is that everyone should have at least one credit card, and ideally, you should have more than one.

Once you’re ready to start applying for additional cards, you need to consider many different things, such as which is the best credit card, why are you getting a new card, and how does getting a new card affect your credit score? You may not know the answer to all those questions off the bat, but we’re here to guide you through the process so you can make an informed decision.

How Many Credit Cards Do People With Excellent Credit Scores Have?

It’s impossible to give an exact number of credit cards that people with good credit scores have, so let's break things down a bit.

First, what is a credit score? Your credit score is a number that falls between 300-900. If your credit score is between 660-724, your score is considered good. A score that falls between 725 and 759 is very good, while 760 or higher is considered excellent.

It doesn’t matter if your credit score is “good,” “very good,” or “excellent,” you likely won’t have a problem securing additional credit, such as a credit card. However, keep in mind that every time you apply for a new credit card, your credit score goes down by 10 points. Based on this, someone who has a credit score around 660 may have a harder time getting approved for more credit cards compared to someone who has a score of 800. You might be wondering how to find your credit score. Luckily, you can get a free credit score check with the Canadian financial technology company Borrowell, and looking it up won’t affect your credit score.

You might think that this implies that people with excellent credit scores have quite a few credit cards, but there are many other things that affect your credit score such as:

  • How much you owe
  • The length of your credit history
  • Payment history
  • The types of credit you use

In other words, someone with an excellent credit score could have one credit card or they could have up to 20. How many cards they have depends on how many they’ve applied for and been approved.

How Many Credit Cards Is Too Many?

If you use your credit cards responsibly, you can never have too many credit cards. Using your credit cards responsibly means paying off your full balance every month on time so you avoid any interest charges.

At the very least, you should have two credit cards. The reason for this is simple: if one credit card doesn’t work, you have a backup. In an ideal situation, your two credit cards will be from two different issuers (e.g. a Visa or Mastercard).

Applying for multiple credit cards can also make sense in more than one situation. For example, let’s say your regular everyday credit card is the Tangerine Money-Back Card, which gives you 4% Money-Back Rewards in up to 3 chosen categories. But one day, an emergency comes up and you’re forced to charge a large sum to your card. Unfortunately, you don’t have the funds to pay off this expense, so you’re forced to pay the 19.95% interest rate.

However, if you apply for the Scotiabank Value® Visa* Card, you could do a balance transfer and just pay 0.99% interest for 6 months and then 12.99% after the promotional period ends. There’s also the BMO® Preferred Rate Mastercard®* card, which has a balance transfer interest rate of 3.99% for 9 months and then 12.99% after that. With either of these cards, you’d pay significantly less interest than the Tangerine card, so you can see why having multiple cards can be a good thing.

Of course, having too many premium credit cards could be problematic. Let’s say you have five higher-end credit cards and they each charge an annual fee of about $120. That’s a total of $600 that you’re paying in annual fees. In this scenario, it likely makes sense to cancel some cards unless you use each one for a specific reason or they give you value that is worth more than the annual fee (e.g. travel insurance).

Can Having Few Credit Cards Improve Your Credit Score?

Interestingly, having one or just a few credit cards can greatly affect your credit score in positive and negative ways. The reason why things can swing so much depending on how many credit cards you have is due to your credit utilization rate.

Your credit utilization rate is how much credit you’re using relative to how much credit you have available. Let’s say you have one credit card with a limit of $1,000 and you typically have a balance of $800. Even though you pay that amount off every month, you would have a credit utilization ratio of 80%.

Since your credit utilization ratio counts towards 30% of your credit score, having a high ratio can affect your credit score in a negative way.

On the flip side of things, you could also quickly lower your credit utilization ratio by applying for another credit card. Let’s say you do this, and you’re approved for a new credit card with a limit of $1,000. The total amount of credit you have access to is now $2,000 but your utilization ratio has now dropped down to 40% – which could increase your credit score.

Having just a few credit cards could improve your credit score, but it really depends on how you use them. Another major aspect of your credit score is your payment history, which accounts for 35%. If you always pay your bills on time, then you’ll be in good standing. Your credit utilization ratio and payment history account for 65% of your credit score – so keep that in mind when you use your credit cards.

Is It Bad to Have Lots of Credit Cards?

Let’s be clear: if you’re always paying off your credit card bills every month, there’s nothing wrong with having lots of credit cards. Of course, your definition of “lots of credit cards” may differ from others. Some people may think three cards is a lot while others would say 10 is too many.

As mentioned above, if you’re getting value out of certain cards, they may be worth holding onto even if they have an annual fee. For example, the Scotiabank Passport™ Visa Infinite* Card that comes with a free Priority Pass Membership and six free annual passes. That has a value of over $300 yet the annual fee on the card is just $139.

Not everyone thinks about using their credit cards for the benefits, but it’s a strategy that can be effective. That being said, having many cards can be tricky if you don’t keep track of them. Store your cards in a secure spot and write down the anniversary dates of any that you don’t use regularly that also has an annual fee. By having a records system in place, you’ll avoid missed payments.

Why Apply for Multiple Credit Cards?

There are a few reasons why people would apply for multiple credit cards, but here are some common scenarios.

Many people get their first credit card through their parents’ bank because that’s all they know. But later in adulthood, they realize there are more options out there, so they shop around for the best Canadian credit card. This usually leads to them obtaining the second card, but since it’s the first time they’ve had more than one card, it can feel like a big deal.

For other people, they quickly realize that having multiple credit cards can benefit them personally. For example, if you travel a lot and stay at Best Western hotels, then having the Best Western Mastercard® is the perfect fit since you’ll earn Best Western Rewards® points that you can redeem for hotel stays, dining, gift cards, and more. However, since you only earn Best Western Rewards® points with this card, you may want to have a backup card that earns you cash back or travel rewards, such as the BMO® AIR MILES®† World Elite®* Mastercard®.

Another popular reason to have multiple credit cards is the promotions that are available. When signing up for a new card, the provider will often offer a huge sign-up bonus or a higher cashback earnings rate as an incentive. These promotions could be worth $250+ which are quite generous. A good example is the TD® Aeroplan® Visa Infinite*new cardholders receive a generous welcome bonus of up to 30,000 Aeroplan Miles* as well as additional miles with every dollar spent. That's the equivalent to 2 economy short-haul roundtrip flight rewards! And although the annual fee of $120 is a bit steep, new cardholders can take advantage of the first year rebate. But to get this generous limited-time welcome offer, you must apply online by March 2, 2020.

TD® Aeroplan® Visa Infinite* Card Details:

TD-Aeroplan-Infinite-Visa-Card_243x153Annual Fee: $120
Purchase APR: 19.99%
Cash Advance APR: 22.99%

Limited-time online-only offer: Apply online by March 2, 2020, to get an annual fee rebate for the first year and the welcome bonus of up to 30,000 Aeroplan Miles (the equivalent of 2 economy short-haul roundtrip flight rewards!).

Learn more about the TD® Aeroplan® Visa Infinite.

*This offer is not available for residents of Quebec. For Quebec residents, please click here.

What Else Affects Your Credit Score?

We’ve already stated that your credit utilization rate and payment history count towards 65% of your credit score. But what about the remaining 35%?

Well, there’s the length of your credit history, which accounts for 15% of your credit score. For this reason, you may want to think twice before cancelling your oldest card. If you don’t use that card anymore and it has no annual fee, just put it in a box at home so your credit score will continue to be in good standing.

There are also new credit applications and types of credit used that each count towards 10% of your credit score. Unless you plan on buying a home and applying for a mortgage in the near future or you have a credit score in the mid to high 600’s, applying for new credit cards likely won’t be a big deal. Yes, your credit score will take a hit of 10 points with each inquiry, but that will go back up after a few months of making your payments.

The types of credit used refer to things such as credit cards, lines of credit, mortgages, personal loans, and more, which were important indicators in the past of how you used your credit. But these days, it doesn’t seem to have much weight on your overall credit score.

It's definitely more difficult, but not impossible, to get a personal loan with bad credit. You can apply with a bad credit lender — private lenders for personal loans, and there are several in Canada. For our top choices, check out our article on The Best Bad Credit Loans in Canada.

Parting Words: Should I Apply for New Credit Cards?

If there’s a legit reason for applying for a new card, such as you want to take advantage of a sign-up bonus or you want a backup card, that’s perfectly fine. What you don’t want to do is apply for a bunch of cards just so you can run up huge bills with no way to pay them off. If your credit score is currently in the dumpster and you want to get multiple credit cards, think about applying for one of the best credit cards for bad credit. Applying for a card like the No-Fee Scotiabank Value® VISA* Card, you'll not only have a very good chance of getting approved but it will also help you repair your credit score (that is, if you use it responsibly).

The bottom line? Many people use multiple credit cards responsibly and maintain a good credit score. But keep in mind that it’s been proven that people typically spend more when using credit over cash. Be aware of your spending and you can keep yourself in check.

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Barry Choi

Barry Choi is a personal finance and travel expert at MoneyWeHave.com. He has been quoted by media in Canada and the United States, including The Financial Post, The Toronto Star, Business Insider, The Globe and Mail, and has appeared on HuffPost Live.

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