How Many Credit Cards Should I Have? It Depends

How Many Credit Cards Should I Have? It Depends

Posted on May 24, 2022

We are often recommending using a credit card to help rebuild credit. We will suggest using one for everyday expenses and to set up automatic payments to help build a positive payment history. But how many credit cards should you have? Is there an ideal number?

Our auto loan team tries to find out.

Credit cards and you

According to 2018 data, Canadians have an average of 2.2 credit cards each. That’s fewer than Americans, who have 3.84 credit cards.

There is no magic number, as all our needs and situations are different. So, as we so often do, let’s look at the pros and cons of owning multiple cards.

Pros of multiple credit cards:

Increases available credit – The more cards you have, the more credit you have available. As long as you have the willpower to not use it all, this gives you a safety net to use in emergencies or when you need to spend.

Credit utilization also goes towards your credit utilization ratio that helps make up your credit score.

Reap the rewards – If you use reward credit cards, having multiple cards means multiple points or gifts. It’s a minor benefit but if those gifts include discounts on groceries or gas, it could add up.

Balance transfers – Having multiple credit cards enables you to transfer balances between them to minimize paying interest. Ideally, you would close a credit card account you no longer use but not everyone does.

Cons of multiple credit cards:

Temptation – The one thing about having lots of credit is we all know ways we could use it. It takes willpower to not go on a spending spree when we get a new card!

Multiple payments to make – Hopefully by now you realize the importance of automatic payments. If you don’t, having multiple cards means multiple payments and payment dates.

Lots of interest to pay – Unless you’re using 0% cards or balance transfer cards, the more you have, the more interest you’re in for. Credit cards are expensive forms of debt and that interest could soon add up.

Credit cards and credit scores

There is nothing wrong with having multiple credit cards as long as you can stay on top of them all. Use them only when necessary, pay them off at the end of the month and use automatic payments to keep on top of them and you should be fine.

Don’t apply for too many at once though as every application will include a hard inquiry. Too many of those close together and you may have trouble getting a new card. Your credit score may also dip a little too.

While there is no hard and fast rule, we would say Canadians have it right, as we so often do.

We suggest that 2 or 3 cards is plenty enough for most of us. If you need more credit, request a rate limit increase rather than getting a new card. It still counts towards your credit utilization and won’t need a new hard inquiry.

That’s what we do anyway.

We will use all our skill and experience to deliver the lowest possible auto loan rates, guaranteed. Contact Car Nation Canada Direct to learn how we can help.

Be sure to connect with us on Facebook, Twitter, Instagram, or LinkedIn to stay up to date on our latest great articles!