How Many Credit Cards Should I Have in Canada?

How Many Credit Cards Should I Have?

There’s no magic number of credit cards to have — but knowing your spending habits, ability to pay on time and credit score will help you decide.

Shot of a young woman using a laptop and smartphone while making online purchases with one of her many credit cards to maximize points.

Whether you’re looking to earn more rewards, improve your credit or cover a few extra purchases every month, the idea of getting a second (or third, or fourth) credit card may be intriguing.

There are no laws in Canada preventing you from having multiple credit cards, and there are definite benefits to carrying more than one card simultaneously.

Determining how many cards you should have depends heavily on just how well you manage the ones you’re already working with, and how any extra cards will impact your overall finances.

Is it good to have multiple credit cards?

Having multiple credit cards can deliver some fairly useful benefits, like building your credit history and giving you access to more rewards.

Applying for another credit card might be the right strategy if you want to:

Be covered in emergencies

Many people get a second card to diversify the number of credit card networks they deal with.

For example, suppose your first card was a Visa. In the unlikely event that the Visas’ back-end tech goes down and you can’t use your card, or something happens to your account and it’s temporarily unavailable, having a Mastercard or American Express as your secondary card gives you a backup financing option.

Earn more credit card rewards

Getting a new credit card can also help you score generous welcome bonuses from your new card provider. Sign-up bonuses vary among issuers and change all the time, but can include perks like thousands of bonus points and waived annual fees.

An additional credit card can also help you diversify the types of rewards you collect. One card might help you accrue travel miles while another earns cash back on things you buy all the time, like groceries.

You might also choose to carry multiple credit cards to maximize behind the scenes benefits, such as:

Travel insurance.
Airport lounge access.
Roadside assistance.
Mobile device insurance.
Or another kind of credit card insurance.

Improve your credit score

If you’re a responsible credit card user — mindful of your credit limit and diligent about paying your balance in full each month — carrying multiple cards may eventually benefit your credit score.

How? When you spread your spending across more than one credit card, your overall credit utilization ratio comes down.

Let’s say you were previously charging $500 a month to your only card, which has a credit limit of $1,000. Your credit utilization would be 50%. If you get a second card with a credit limit of $2,000, but your spending stays the same, that $500 now equals 17% credit utilization across the two cards.

A lower utilization ratio shows lenders that you’re not overly reliant on credit, and they may see you as less of a risk. Showing that you can pay two credit card bills on time every month won’t hurt, either.

Why is it bad to have multiple credit cards?

Carrying more than one credit card doesn’t guarantee more rewards and healthier finances. In many cases, opening up additional lines of credit can have adverse effects on your credit score and cause financial strain.

A temporary hit to your credit score

When you apply for a new credit card, the provider performs a hard credit inquiry to determine your credit score and history. Hard inquiries typically have a temporary negative effect on credit scores — whether you’re approved for a new card or not. If you frequently apply for new cards, it could prolong this effect.

Potential long-term damage to your credit

Maintaining or improving your credit score requires you to pay all of your credit card bills on time. If multiple credit cards turn into multiple bills you can’t keep up with, and you’re forced to make only minimum payments, your credit score will suffer over the long-term (and you’ll end up paying a lot of extra interest).

Strained finances

The risk of overspending, being clobbered with high interest charges and falling deeper into debt grows with every credit card a person adds to their wallet.

If getting a second or third card might trigger unnecessary spending that your budget can’t support, be honest and self-aware about it and consider saying no to those new cards.

How many credit cards are too many?

The number of credit cards that’s right for you depends on what you can afford to spend and pay back on time.

If you’ve never had a problem paying down your single credit card, and your income and expenses are stable, you can probably handle the extra responsibility. But if having one credit card is already putting an uncomfortable amount of pressure on your finances, it might not be the right time to add more to your wallet.

Can you apply for multiple credit cards at once?

While you are free to submit as many credit card applications as you like, as often as you like, it’s important to do so with caution. Multiple hard inquiries can imply that you’re in desperate need of credit, and that you may not be capable of repaying the debt.

More than one hard inquiry for things like a mortgage are typically combined when performed in the same two week period, which can limit the impact on your credit history. This is not true with credit cards. Each hard inquiry performed for a new credit card impacts your score.

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Pros and cons of having multiple credit cards

Pros

Coverage in case of emergency. Having multiple cards will likely mean that at least one of them will work at all merchants.
Earn more points or cash back. Another credit card can give you a nice welcome bonus or additional cash back in some categories.
Added benefits. Some credit cards may have extra perks, such as extended warranty insurance, no foreign transaction fees and companion vouchers.
Builds credit. If used responsibly, having another credit card could improve your credit score.

Cons

Could lead to unmanageable debt. For some people, having access to more credit encourages them to spend more.
Credit score may drop. Your credit score can decrease — short-term when you apply and possibly long-term if you can’t make your monthly payments consistently.
More bills to manage. You’ll need to be on top of all your accounts to ensure they’re paid on time and aren’t falling victim to credit card fraud.

About the Authors

Georgia Rose

Georgia Rose is a lead writer on the international team at NerdWallet. Her work has been featured in The Washington Post, The New York Times, The Independent and The Associated…

Clay Jarvis

Clay Jarvis is NerdWallet’s mortgage and real estate expert in Canada. Thus far, his entire professional writing career has revolved around real estate. Prior to joining NerdWallet, he was the…