Rights & Money

How Many Credit Cards Is Too Many?

Find out the benefits and drawbacks of having more than one card in your wallet

By Matt Smith


The average Canadian carries 2.2 credit cards, according to a 2016 consumer survey. Cash-back and travel-reward offers can be tempting: sign up for a new credit card and get more perks. Is it a good idea, though?

One of the best reasons for having more than one credit card is to ensure that you’ve got a backup in the event of fraud or a lost card. You’ll be covered if any emergency expenses come up while you’re waiting for a replacement card to show up in the mail.

A downside is that more cards mean more accounts to manage—and more chances to miss a payment—but this isn’t as much of a hassle as it once was; many banks and credit-card providers allow you to sign up for electronic notifications to let you know when your bills are due.

If you’re self-employed or make frequent business purchases, having a separate credit card for these tasks may be a boon to your bookkeeping, as it’ll make it easier to distinguish between personal and business expenses.

Your credit score is primarily determined by paying your bills on time, but there are other factors to consider. Among these is your credit utilization rate—that is, the percentage of your total available credit that you’ve actually used (and owe). Having a low utilization rate is key to maintaining a good credit score, and adding an additional card can help you get there, provided that it doesn’t lead to even more spending and more debt.

Be wary of signing up for too many credit products, though, as this can harm your score instead. Every credit application causes a hard inquiry into your credit score, which lowers your rating. Opening a new account here and there won’t make a big difference, but a string of applications in quick succession can signal to banks that you’re in a poor financial position.

Ultimately, the right number of credit cards for you is going to be based on your spending habits and financial needs. There’s nothing wrong with having multiple accounts, but be careful not to open more than you can manage at one time.

Photo: iStock.