How Many Credit Cards Should I Have in Canada?

There are more than 75 million Visa and MasterCard cards circulating in Canada. But how many does the average consumer have, and how many should you? 

Because there is no set limit by law, the number of credit cards a person should have can vary depending on individual circumstances and preferences. 

If you’d like to find out how many credit cards you should have in Canada, however, we’ll help you figure that out. As a bonus, we’ll also be covering best practices to manage your cards and more! 

How many are too many credit cards?

A basic rule of thumb when it comes to deciding how many credit cards you should have is this: if it is becoming too difficult to effectively juggle the monthly payments and balances of your multiple credit cards, you likely have too many on your hand. 

As you might already be aware, missing payments – especially several in a row – can negatively affect your credit score, limiting your ability to access credit in the future. 

The minimum number of credit cards you should have

If you are of legal age in the province in which you live, you should have at least one or two credit cards. This will allow you to build and maintain your credit rating over time, given that you are responsible for making your payments on time. 

Having at least two credit cards is useful in the case of fraud, theft or other unfortunate incidents in which you might have to cancel or freeze a credit card. This way, you’ll still have access to credit in times of financial uncertainty or plain bad luck. 

It’s also recommended that you use only one of your credit cards for online purchases, which can minimize your exposure to data leaks and other cyber security threats. You can also consider leaving one of your credit cards at home for safety. By doing so, you are not exposing all of your credit cards to fraud or theft at once, minimizing your risks. 

The maximum number of credit cards you should have

As mentioned earlier, there is no set limit as to how many credit cards you can actually have. As long as you are able to manage them all without negatively affecting your credit score, you can get as many as you like! 

For me, I’m happy to be capped off at three. I do, however, know people who are happy with four or five or even master credit card churners who rotate many credit cards at once to take advantage of their sign-up bonuses. As any churner will tell you, however, doing this is no easy task and requires serious organization and planning.

Ultimately, the ideal number of credit cards you have will heavily depend on your unique circumstances. It’s crucial to consider your financial goals, credit management abilities, and personal preferences when determining the number of credit cards that best suits your needs. Remember, responsible credit card usage and timely payments are key to maintaining a healthy credit profile.

The benefits and risks of having multiple credit cards in Canada

Going over the benefits and risks of having more than one credit card can help you land on your magic number. So, let’s cover some of them. 

The benefits of having multiple credit cards

More rewards and benefits: Some cards offer extra cash-back for dining out, while others give great miles for travel. By having multiple cards, you can diversify your rewards potential and take advantage of various offers, whether it’s cash-back, airline miles, hotel discounts, or exclusive access to events. 

Having a backup: If one credit card is lost, stolen, or temporarily unavailable, having another card as a backup ensures you can continue making essential purchases without disruption. It provides peace of mind and convenience, especially when travelling or in situations where cash might not be readily accessible.

Improved credit utilization and credit mix: Credit utilization, which is the ratio of your credit card balances to their respective credit limits, plays an important role in your credit score. By having multiple credit cards, you can distribute your spending across them, keeping your credit utilization ratio lower. Additionally, having different types of credit, including credit cards, can contribute positively to your credit mix, which is another factor considered in credit scoring models.

Segregation of expenses and budgeting: Multiple credit cards can be used for specific purposes or categories of expenses. For instance, you may designate one card for groceries, another for travel expenses, and another for online shopping. This segregation can make it easier to track and categorize your spending, facilitating budgeting and financial management.

The risks of having multiple credit cards in Canada 

The temptation to overspend: Having multiple credit cards may increase the temptation to overspend. With access to multiple lines of credit, it can be easy to accumulate more debt than you can manage or afford. It’s important to exercise discipline and only charge what you can comfortably repay.

Juggling payments: Managing multiple credit cards can become challenging, especially if you have to keep track of various due dates, minimum payments, and billing cycles. If you miss or make late payments on any of your cards, it can negatively impact your credit score and result in costly late fees or interest charges. 

Impact on credit score: While having multiple credit cards can positively impact your credit score through factors like credit utilization and credit mix, it can also have adverse effects if not managed properly. Applying for multiple cards within a short period can result in inquiries on your credit report, potentially lowering your score temporarily. Additionally, mismanaging multiple cards and falling behind on payments can also significantly harm your credit score.

Best practices for managing multiple credit cards

If you choose to have multiple credit cards, managing them effectively will require careful organization and responsible financial habits. Here are some best practices to help you make the most of it. 

Keep organized

Keep track of important information related to each credit card, such as the credit limit, interest rate, due dates, and rewards programs. Create a system that works for you, whether it’s a spreadsheet, a smartphone app, or a physical file.

Set up payment reminders

Missing credit card payments can have severe consequences, including late fees and negative impacts on your credit score. Set up payment reminders through mobile apps, email alerts or your calendar to ensure you make payments on time. You can also consider setting up automatic payments from your chequing account. 

Pay in full and minimize debt, if possible

Whenever you can, strive to pay off your credit card balances in full each month. By doing so, you avoid accruing high-interest charges and keep your debt levels low. Minimizing your debt load across multiple cards is essential for maintaining a healthy financial profile.

If you end up carrying a balance on one or more credit cards, consider keeping track of the amounts borrowed, the interest rate, minimum payments, and your payback plan. This way, you can avoid the snowball effect that tends to happen with credit card debt. 

Monitor your credit utilization

If you have multiple credit cards, it might not be as obvious how much of your available credit you are using each month. As such, you should make it a point to monitor it, at least on a bi-monthly basis. 

Aim to keep your credit utilization below 30% for each individual card and across all your credit cards combined. This practice will help you maintain a favourable credit score.

Evaluate rewards programs

Make sure to fully understand the rewards programs associated with each of your credit cards. Regularly assess whether the rewards align with your spending habits and goals. If not, you can consider consolidating your spending on cards that offer the most valuable rewards for your needs.

Be mindful of annual fees

You might already be aware that some credit cards charge annual fees for their services. Evaluate the benefits and rewards you receive against the cost of the annual fee. If the benefits outweigh the fee, it may be worth keeping the card. Otherwise, consider closing or downgrading the card to avoid unnecessary expenses, especially if you are dishing out these fees for multiple cards each year. 

Limit new credit applications

Applying for multiple new credit cards within a short period can negatively impact your credit score. Be selective and cautious when considering new credit cards, and space out your applications to minimize the potential negative effects on your credit. 

Regularly review your credit score

To make sure you are on track, try to obtain free copies of your credit reports from major credit bureaus (particularly Equifax and TransUnion) at least once a year. Review them for accuracy and to ensure that all your credit card accounts are reported correctly.

Throughout the year, you can also use free credit checkers to have a good understanding of your score and make any adjustments if necessary. 

Conclusion: How many credit cards should I have in Canada? 

In conclusion, determining the ideal number of credit cards an individual should have in Canada is a personal decision that depends on various factors. 

With the average Canadian having somewhere between two to three credit cards, we recommend that you start there and increase gradually if you see fit. As everyone’s habits, financial goals, and preferences are different, some may find benefits in having multiple cards to maximize rewards and financial flexibility while others may prefer the simplicity that comes with fewer cards. 

It’s crucial to strike a balance between reaping the benefits of numerous cards with managing them responsibly to avoid debt and financial complexities. By understanding the risks and benefits, practicing responsible credit management, and adhering to best practices, you can effectively navigate the world of credit cards and make choices that align with your financial goals and lifestyle!

Here are the answers to the most frequently asked questions about having multiple credit cards in Canada.