Hardbacon logo

Should You Have More Than One Credit Card?

    If you only have one credit card, you’re missing out on a ton of benefits. For some people, one credit card really is better. But if you know how to use them properly and pay them off each month, multiple credit cards can actually help you master your money.  It really just depends on what you want from your credit cards and what your financial goals are.

    Sure, one credit card is fine. Especially if you don’t plan to use it often. But you’re leaving free money on the table. If you want to maximize your income and keep building a credit score that impresses lenders, several credit cards are the way to go. Naturally, you need to manage them like a boss.

    Here are the top 3 reasons to add more plastic to your wallet.

    1. Get more rewards

    There are almost endless credit card options on the market, all with different features and benefits. So how do you choose the right one?  Two words: Maximum rewards. You want a card that offers the best rewards or cash back in as many spending categories as possible, like:

    • Travel
    • Food
    • Gas
    • Shops
    • Restaurants
    • and the list goes on

    But why are there so many different credit cards on the market? Credit card issuers are using rewards and welcome offers to lure customers in because more credit card options mean more customers.

    That’s great news for you! That means there are credit card combinations that will help you get the most rewards. The best travel rewards credit card is usually not the same as the best restaurant reward credit card. By using more than one credit card strategically, you can earn even more rewards across different spending categories.

    Gamify your purchases with more than one credit card

    When you use just one credit card for all your purchases, you miss out on rewards and leave free money on the table. Here’s an example:

    You have one card earning 2% cash back on gas purchases, but only 1% for everything else, even food. You purchase one month worth of gas for $100, and spend $500 on dining out. You got $7 dollars back for a total spend of $600 on gas and food.

    Now you have two credit cards. The first gives 2% cash back for gas purchases, and the other card gives 5% cash back restaurants and dining. Your $100 in gas and $500 in restaurant rewards for the month are now suddenly worth $27.

    By strategically using two different credit cards for different types of purchases, you maximized your rewards.  Better yet, neither of the cards comes with an annual fee. Yes, there are solid no-annual fee rewards cards, so all of these rewards are yours to keep.

    2. Increase your credit score

    Part of your credit score is calculated based on how much credit you have available to use across credit cards and lines of credit, versus how much of that credit you have already used. It’s called your credit utilization ratio. The more credit you use up, the higher the ratio is, and the more it hurts your credit score. Your available credit increases with each credit card you have, so you can spread the balance between the two accounts, reducing the use of one of your credit cards and lowering your utilization ratio.

    You’ve got a credit card with a $5,000 credit limit, for example, and you have a balance of $3,000 on it, leaving only $2,000 of available credit left to use. You’ve used up 40% of your credit limit. Experts recommend keeping your credit limits below 30% for all cards. With a second credit card, it’s easier to keep the balances on each under that 30% threshold which has a positive impact on your credit score.

    3. Emergency backup

    In case a merchant or bank does not honour your primary credit card, a second credit card provides a quick alternative. You may like Discover’s cash-back credit card rewards and want to use this card as the main account, for example. But not all dealers agree to Discover’s limits or regulations, so an alternative could be a second credit card, such as a Mastercard or VISA. Alternatively, you could use a low interest credit card as a backup.

    The bottom line when applying for a credit card

    Conventional wisdom tells people to avoid credit cards. But if you know how to use them properly and pay your balance off in full every month, you’re missing out! Contrary to popular belief, there are more good reasons to have more than one credit card than there are bad reasons. More credit cards mean better rewards, more cash back, and a backup plan in case of an emergency!

    For most Canadians, the credit reporting system is a grey area with a lot of misinformation online. Get the facts from reputable sources before making the decision to apply for more credit. Non-profit credit counselling agencies across Canada respond to credit and debt queries free of charge. There’s no barrier to getting the knowledge that you need to make educated decisions. If you to show potential lenders you are a responsible borrower, work to ensure that your money is balanced; all of the spending, save and borrowing elements are essential in a good money management plan.

    Compare Canadian Credit Cards
    Compare Canadian Credit Cards
    Find the best credit card for your needs by answering a few questions.

    Find the best credit card for your needs

    Arthur Dubois is a personal finance writer at Hardbacon. Since relocating to Canada, he has successfully built his credit score from scratch and begun investing in the stock market. In addition to his work at Hardbacon, Arthur has contributed to Metro newspaper and several other publications