How Many Credit Cards Should I Have?

Any benefit achieved with multiple credit cards ultimately depends on the cardholder and how financially responsible they are.

Some prefer to live without a credit card and avoid the temptation to spend money they don’t have. Some do well with only one card, benefitting from perks like cash back, rewards and travel insurance coverage. Some people are able to manage two cards serving different purposes—one for everyday expenses and one for special dining out or travel experiences.

Then there are the credit card users who make a hobby out of maximizing rewards—you may have come across their Instagram or TikTok accounts—usually travel rewards in particular. These aficionados often keep binders full of credit cards and spreadsheets managing annual fee and monthly payment due dates. There are many routes to take with credit card ownership, but it is ultimately each cardholder’s choice as to which will truly benefit them and what they are capable of handling.

The number of credit cards you should have depends entirely on your unique financial situation and spending history. The most important thing to ask is if you can pay off the full balance on every card every month. Having several cards is a lot of responsibility and if you doubt your ability to pay each monthly balance it might be best to avoid collecting multiple cards for now. In the long run, it is always best to resist the temptation to keep spending.

Before You Apply For a Credit Card

Before choosing to apply for any credit card, remember that avoiding credit cards is a perfectly valid choice and can help avoid piling on debt, especially during times of inflation. Now may be a time to approach credit with caution: According to a report from Equifax, consumer debt has soared in Canada, with non-mortgage debt rising to a staggering $21,183 (the highest level since the second quarter of 2020).

What’s more, you may be faced with transaction fees when using your credit card. As of October 2022, merchants gained the ability to pass these fees onto customers. As a result, any rewards you gain may be outpaced by both annual fees and now swipe fees.

Plus, when sticking with cash the only money available to spend is money on-hand or saved. For many, that’s a more effective form of budgeting than having access to thousands of dollars. Adding a debit card to the mix offers convenience and allows online purchases without the temptation to overspend.

The main downside to living without a credit card is the increased difficulty in building a credit score. You’ll need a solid credit score to take out a mortgage or for other large purchases, and it’s more challenging to get one without a credit card. That said, there are other ways to build credit, like a history of timely payments on student or car loans. Still, for those without other loans, a credit card paid in full each month is a convenient and relatively simple way to build a stable credit history for larger financial commitments (such as buying a home) down the road.

Another drawback to living without a credit card is that you’re passing up the potential to earn rewards on your spending. Some banks do offer debit cards that earn rewards for purchases, but these are few and far between.

Debit cards and cash also don’t offer the same purchase and fraud protection credit card companies usually provide.

Related: How To Apply For A Credit Card (And Receive Approval)

A Single Cash Back Card

For those applying for a first credit card, we recommend finding a card with no annual fee that pays cash-back rewards on every purchase. For instance, the SimplyCash® Card from American Express 1.25% cash back on all your purchases, with no limit. It also offers you 2% cash back on gas and 2% cash back on groceries, on up to $15,000 annually. This provides a great opportunity to build comfort with how rewards and credit cards work.

Cardholders may also consider a card on the Visa or Mastercard networks, both are accepted by more retailers than American Express. The Tangerine Money-Back Mastercard has no fee and allows users to choose two spending categories that they’ll earn 2% cash back in and earns 0.5% back on everything else.

Students applying for a first credit card who don’t have much income or credit history should consider student credit cards which are aimed at just such a person pursuing academia with a lack of a credit history.

Add Multiple No-Annual-Fee Cards Based on Where You Spend

When adding cards to your wallet, think about where you spend the most with your credit card and educate yourself on which cards offer extra rewards in these places. Keep your eye out for cards with no annual fees.

A smart starting point could be to find a credit card with no annual fee that rewards the most for grocery shopping. For instance, the American Express Cobalt® Card offers 5 points per dollar on grocery spending and the PC Financial World Mastercard lets you earn 20 Optimum points per dollar when you spend at any Loblaws banner grocery store.

Canceling a credit card early on while building credit history could damage your credit score. Reducing credit lines may mean an increase in the credit utilization rate, which also can reduce your score.

Depending on your lifestyle, there may be other options for additional cards, alternative to those offering cash-back rewards. Consider a card that rewards the cardholder for travel expenses, like the CIBC Aventura Visa.

Specific retailer credit cards may also be convenient. These types of credit cards offer benefits and rewards tied to a specific retailer. Need a new work wardrobe? You may want to look at the Hudson’s Bay Mastercard. Major retailers like Walmart, Costco and Amazon also all offer co-branded or store credit cards with unique benefits, too.

Pay Annual Fees for Cards With Better Rewards

Sometimes specific rewards may justify paying an annual credit card fee. Consider loyalty to specific brands beyond a specific retailer, since most retailer cards don’t require an annual fee.

The key brands here involve travel. If someone stays most often at Marriott hotel properties or flies primarily with Air Canada, a Marriott Bonvoy or an Aeroplan credit card may be just the ticket. Most of these brand-loyal credit cards do charge an annual fee. Try to pick the credit card offering the most likely-to-be-used benefits in excess of the annual fee.

When it comes to airlines, benefits vary when choosing an airline-specific card and considering which you’ll actually use is important. For example, the WestJet RBC World Elite Mastercard not only earns you WestJet dollars on your spending, but includes perks like travel insurance and gives you a round-trip companion voucher each year.

There are some credit cards with annual fees offering enhanced rewards on grocery and gas spending. The CIBC Dividend Visa Infinite, for instance, offers you 4% cash back on both groceries and gas.

Pursue Big Rewards and Welcome Bonuses

Pursuing big rewards and welcome bonuses can sometimes pay off, but it’s a risky game not everyone plays wisely. Big rewards often accompany much higher annual fees and high credit limits that can make it tempting to spend more than necessary.

A clear example of a big rewards credit card that could spell big risk if not used responsibly is The Platinum Card® from American Express. For its hefty $799 annual fee, cardholders get a $200 annual travel credit, airport lounge access, and a plethora of travel insurances and impressive earn rates on dining, food and travel. For someone who travels extensively and spends more than your average joe, it may be well worth it, but for the rest of us, it’s probably better to go with a credit card that’s a little more conservative and not as flashy.

Strategizing the unique benefits that each card offers is a key aspect of playing the credit game. When getting ready to sign up for a first credit card, instead of grabbing the first offer advertised, do some research. For example, for student credit cards, read about the non-student version of that card that the cardholder can graduate to and compare it to other non-student options out there.

As cardholders start to build a portfolio, they should consider how each card’s benefits can improve their lives in different ways (and increase a credit score). The key for any cardholder is to identify their own spending habits and how they can provide an opportunity for greater rewards, a stronger credit line and a lower utilization rate for future loan potential.

Don’t overextend by signing up for too many credit cards at once.

Some people happily acquire credit cards solely for welcome bonuses and then cancel the card—often before the annual fee charge arrives after one year. This is known as “churning-and-burning.” Aside from the difficulty of keeping track of all this activity, there’s the added drawback of how it can affect your credit score. There’s also the possibility that even if your credit score remains solid, opening too many accounts in a short amount of time could result in your bank denying you a new card.

Before signing up for too many cards, consider what each card can offer (say, no foreign transaction fees, travel rewards or cash back on groceries or gas). Weigh the available bonuses against any card already in possession before making a decision. Don’t get seduced by bonuses—think about what you need.

How Many Credit Cards Should I Have to Build My Credit?

Again, this is a personal decision based on what you think you can handle financially. A primary card for everyday purchases is a great way to steadily and consistently build credit over time.

If you’re someone who has goals for major investments or purchases in the near future and know you would like to build your credit quickly, it may help to add several cards to the mix—especially those with specific loyalty programs so you can keep track of them in a more organized and categorized fashion, and for those with annual fees you have yet another opportunity to regularly pay off debt in a timely manner.

You really only need one credit card to start building credit, but the more you have and the more responsibly you use them, the more opportunities you have to earn points and gradually increase your credit line.

You can apply for as many credit cards as you want at any given time, though it’s not advisable. Not only can it be difficult to track applications and cards, it also doesn’t look good on a credit report. If you are someone who opens credit cards for welcome bonuses or temporary benefits then closes them out before having to pay any fees, this pattern is detectable and banks may decide you are ineligible when applying for certain new cards.

Is it Bad to Apply for Multiple Credit Cards?

If you’ve recently begun to accumulate a credit card collection, it may also help to open credit card accounts slowly over several years. Opening multiple card accounts in a short period of time can actually hurt your credit score and can also jeopardize larger financial goals like getting a low mortgage rate when buying a house. Keep in mind, closing out card accounts can also hurt credit scores so it is best to be selective while building your credit card portfolio.

As mentioned above, signing up for a lot of cards at once in a short period of time can hurt your credit score. It’s risky business to grab bonus after bonus and spend more than normal to get it.

Is It Bad to Have Multiple Credit Cards?

While it is not inherently bad to carry multiple cards, cardholders need to know what their own limitations are and what they can handle. It can be difficult to manage payments for multiple credit cards at once. If someone signs up for six different cards all through different credit card companies, then that’s six different mobile apps or websites in need of regular checking to ensure on-time payments. Each card will also likely have a different payment due date.

If cardholders don’t pay off all monthly balances on time, late fees and spiraling debt aren’t the only problems: A growing credit utilization rate will most likely lead to a decrease in credit score. We all drop the ball sometimes in life, but recovering your credit after dropping the ball on credit card payments can be a long and grueling process.

Many people carry only one credit card. They have had one card for years, maintain excellent credit and earn substantial cash back rewards without having to worry about which card they’ll pull out and take with them on any given shopping trip or vacation.

Some folks successfully pursue big rewards and “churn-and-burn.” They continue to open new cards to chase bonuses or to capture the most deluxe travel rewards. This, of course, involves risk—but can also be rewarding.

Whatever future cardholders decide about how many cards to own, follow these three rules:

• Use credit cards whenever possible, making sure a reward is earned.
• Don’t buy anything with a credit card you wouldn’t normally buy with cash.
• Make sure to pay off each credit card balance in full each month.