Rounding it up
There’s no one number of credit cards that’s best for everyone.
There are benefits to having multiple credit cards, including the possibility of a lower credit utilization ratio, which can boost your credit score.
Having too many credit cards can also lead you to spend beyond your means, increasing your risk of going into debt.
The ideal number of credit cards for you is the number of cards you can manage responsibly and pay off in full each month.
Thinking about opening another credit card, but not sure if you’ll end up with too many?
You’re not alone.
Once you’ve had a credit card or two — heck, even three — for a few years, you might be wondering whether you should open a new one.
While opening a new credit card is normally quite straightforward, it’s also serious business. A new account can have both positive and negative effects on your financial life, depending on how you manage your money. That’s why it’s important to figure out how many credit cards you should have before applying for that fancy new card.
So, just how many credit cards should you have?
The reality is that there’s no magic number of credit cards that works for everyone. Since we all have unique financial situations and money management styles, determining how many cards to open is a personal decision. Ultimately, you should open as many cards that you can comfortably manage without taking on debt or extra financial risk.
Although we can’t tell you precisely how many credit cards are right for you, we can help you determine that number for yourself.
What’s the magic number?
As we’ve mentioned, there’s no single number of credit cards that’s ideal for everyone. While some people are more than comfortable managing ten or more cards, others can feel a bit overwhelmed by the idea of having to keep track of two accounts.
With that being said, many prefer to have at least two credit cards in their wallet at any given time.
That’s because different credit cards offer different rewards; maybe you want one credit card for cash back, and another one that offers reward points. Plus, having multiple credit cards also provides you with an alternative method of payment should there be a problem with processing your first card.
However, opening up a bunch of credit cards just to access all the perks isn’t always a great idea. Each new card that you open will come with the expectation that you’re able to manage your finances and pay off your balance each month. If not, you may find that you start accruing debt, tanking your credit score in the process.
How many credit cards does the average Canadian have?
There are approximately 76.2 million Visa and MasterCard credit cards currently in circulation within Canada. If we use Statistics Canada’s 2021 quarterly population estimate and determine that there are approximately 38 million Canadians, we can figure that each Canadian has about two credit cards.
However, this estimate is quite rough because it doesn’t account for the approximately 8.1 million people under the age of 18 or 19 who aren’t yet eligible to open their first credit card in their home province or territory.
This estimate also doesn’t account for the unknown number of Canadians and Canadian permanent residents that don’t currently have a credit card. It also doesn’t recognize the number of people that have cards from other credit networks, like American Express or Discover.
Despite these shortcomings, we can figure that most people with a credit card in Canada likely have more than one card. This statistic doesn’t determine what number of credit cards is right for you, but it does suggest that most people find that they can handle at least two cards.
"While some people are more than comfortable managing ten or more cards, others can feel a bit overwhelmed by the idea of having to keep track of two accounts."
How to decide how many credit cards you should have
Now that you have a rough idea of how many credit cards most Canadians have, let’s talk a bit about how you can decide on the right number of cards for your needs. The easiest way to reach a decision is by assessing the various pros and cons of having multiple cards.
The pros to having multiple credit cards
For many of us, having multiple credit cards opens up a world of possibilities. Okay, that might be a bit of an exaggeration, but there are some sweet benefits to opening and maintaining more than one card.
Improved credit utilization ratio – Your credit utilization ratio is the ratio of the amount of debt you have to the amount of credit you have available to you. This ratio is a sizable part of your credit score and most lenders look for a utilization ratio of less than 30% when deciding whether to offer you a loan. By opening up a new card, you can instantly increase your total amount of available credit, which can help your credit score in the long term.
Chance to get new rewards & perks – For your first credit card, you probably got a simple card with few perks or rewards. But, if you play your cards right (see what we did there?), you can open new credit lines that provide you with travel points, cashback, and other bonuses. But remember, the cards with the best benefits often require excellent credit scores so always be diligent with your credit card spending.
Access to a back-up payment method – If you ever have to lock your credit card due to fraudulent activity, having a backup payment method, like a second credit card, on hand is important. Of course, you can also use your KOHO prepaid Mastercard for purchases, but it’s nice to have a second credit card available, just in case.
Increased credit line for large payments – As we’ve mentioned, opening a new credit card provides you with an increased amount of available credit. This can be helpful if you’re looking to make a large purchase that you’ve been saving up for, like flights for your next vacation. By putting these large transactions on one credit card, you can keep your other card free and available for your regular daily purchases to stop yourself from accidentally maxing out a card.
Disadvantages of having multiple credit cards
Although there are plenty of superb benefits to having multiple credit cards, there are also a number of disadvantages that you ought to consider. With that in mind, here are some key drawbacks to opening a new card:
Temporary decrease in credit score – Even though having multiple credit cards can benefit your credit score in the long run by increasing your credit utilization ratio, you should be prepared for a small dip in your score soon after applying. In fact, applying for a new card can cause your credit score to drop by about five points within a month or so after your application. This change is, thankfully, temporary, but it’s worth knowing before you apply.
Requires more money management & organization – As you can imagine, having multiple credit cards can make managing your finances much more challenging. For some folks, keeping track of more than one account balance is a walk in the park, but if you find that you tend to get stressed out when you receive multiple billing statements, then opening a new card might not be a good idea.
Extra annual fees – If you don’t plan on opening a credit card with an annual fee, you can skip this point. But, it’s worth noting that many rewards cards do charge an annual fee of anywhere from $50 to $500 a year. When you have more than one card, you’ll be on the hook for all these payments, which can quickly add up and eat away at your bottom line.
Increased chance of overspending – Last but not least, it’s important to remember that having more than one credit card can increase your risk of overspending. When you have more available credit at your disposal and too many accounts to manage, you can easily rack up more debt than you can handle. That means anyone looking to apply for a new card needs to be prepared to exercise self-restraint in their daily spending.
So, should I have multiple credit cards?
There are many benefits to having multiple credit cards, so it’s no surprise that many Canadians carry more than one card in their wallet each day. Despite these benefits, having an additional card or two to keep track of can be problematic if you’re not prepared to manage the extra risk and responsibility that comes with credit.
At the end of the day, there’s no one answer to how many credit cards you should have. For some people, a single card is more than enough, while others might be happier with two, ten, or even twenty cards. What’s important is that you find the right balance of risk and reward for your needs when deciding how many credit cards are right for you.
Gaby Pilson is a writer, educator, travel guide, and lover of all things personal finance. She’s passionate about helping people feel empowered to take control of their financial lives by making investing, budgeting, and money-saving resources accessible to everyone.