Costco Credit Cards

How many credit cards should you have in Canada?

This post is also available in: FR

Is it necessary to have many credit cards? If you’ve ever gotten yourself into massive credit card debt, you’ll agree that it’s a no!  For everyone else, though, the answer is likely to be more complicated, as having more than one credit card can have advantages.

There are benefits and drawbacks to having several credit cards, but most people agree that having many credit cards can help or hurt your credit score, depending on how effectively you handle them.

Is it Beneficial to Have Multiple Credit Cards?

One of the primary concerns about having several credit cards is the impact on your credit score. This is a common concern, but having many credit cards can help you boost your credit score by reducing your debt utilization ratio.

Your debt utilization ratio, or the proportion of your available credit that you use, is 90% if you have a $2,000 credit limit on one credit card and use $1,800 every month. A high debt utilization ratio will lower your credit score when it comes to credit ratings. You could wonder if that’s fair because if you only have one credit card and pay it off in full every month, why should you be penalized for using the entirety of your credit limit? However, this is how credit scoring works.

So, is it a bad thing to have more than one credit card? The answer is no if you manage to do the following:

  • you manage your credit well
  • you keep your credit line utilization ratio below 30%
  • you stay on top of payment deadlines

To increase your credit score, most credit experts recommend not utilizing more than 30% of your available credit per card at any given moment.

It’s easier to keep your credit utilization ratio low by spreading your $1,800 in expenditures across multiple cards. This ratio is just one of the elements the FICO credit scoring model considers in the amounts owed section of your score, but it accounts for 30% of your total credit score. Only your payment history is weighted more intensely at 35% in calculating your credit score.

According to credit bureaus, when opening accounts, you don’t need solely to increase your total accessible credit might backfire and harm your score.  Paying high rates can have a negative influence on your discretionary income and investment returns.

What's the Optimal Amount of Credit Cards to Have?

Because everyone has different circumstances, there is no magic number to answer that question. A solid case may be made with security and other benefits of having at least one credit card.

The following might help justify carrying multiple credit cards:

  • You need the extra credit lines to meet your monthly discretionary budget
  • You want to use your daily purchases to gain various types of rewards like pointscashback, or airline miles

How Many Credit Cards Is Too Many?

Having two credit cards can be excessive if you can’t afford to pay your expenses, you don’t need it, or you don’t intend to use it. By getting a new credit card, you can help your credit score by lowering your total credit line utilization, but it’s recommended you don’t get multiple cards in a short period.

Several card issuers have policies to address this occurrence, which has evolved due to customers attempting to rig the system by signing up for multiple credit cards to gain incentives and then canceling after the spending requirements have gotten met.

Another problem with using many credit cards is that it may make you appear risky to lenders, resulting in a reduction in your credit score. Even if you’ve paid them all off, having many open and active credit lines can make you appear risky to the next lender.

Although there is no exact limit to how many credit cards you can have, it’s ideal for applying for and carrying just the ones you need and can justify using based on your credit ratings, capacity to pay bills, and rewards goals.

Multiple Cards = Multiple Benefits

Having various credit cards can help you earn the most rewards possible on every purchase you make.

Here’s an example:

Card one, like the American Express Cobalt® Card allows you to benefit from its 5% cashback category, allowing you to receive 5% back on purchases like groceries, and restaurants.

Card two, like the American Express® Gold Rewards Card always gives you 2% back on gas, so use it at gas station.

Card three gives you a flat 1.5% back on all transactions, like the HSBC World Elite® Mastercard®. This will be your primary card for any purchase that does not qualify for a greater reward.

You don’t want to overspend if you have multiple credit cards, as you can forget to make a payment towards your bill, or you can lose your card. Any problems that can arise will potentially ruin whatever savings you may have already earned.

Compromised Cards

Credit card companies can freeze or cancel your card whenever they feel it’s necessary if they detect fraudulent activity or have suspicions of a compromised account.

Best-case scenario: You can’t use your card until you confirm with your credit card company that you’re traveling internationally and that your card hasn’t been stolen. However, you won’t be able to make that call from the cash register since you’ll need to supply sensitive personal information to verify your identification. If you wish to finish your purchase, you’ll need to find another way to pay.

Worst-case scenario: You’ll get a new account number from the company, and you’ll be without your old card for a few days until you get your new one in the mail. Another risk is that you might misplace or lose a card. To be prepared, you should have at least three cards: two to carry with you and one to keep in a secure location at home. As a result, you should always have at least one card available.

Because of situations like these, having at least two or three credit cards is a good idea. If you only want one credit card, make sure you have a backup payment method on hand, whether a debit card or cash.

Should Your Credit Card be Carried for Emergencies?

In an ideal situation, you wouldn’t need to use a credit card for an emergency, as you would have enough savings to cover such a situation.

When you’re in a situation where you don’t have enough money to cover any form of unforeseen expense while you’re away from home, a credit card can come in handy. Other circumstances, such as losing your job, can quickly deplete any emergency reserves, so having at least two or three credit cards can benefit you. These cards should, in theory, have a significant credit limit, no annual fee, and a low interest rate.


Having multiple credit cards has significant advantages, but only if you manage them wisely. Be aware of the perks each card offers, your account’s credit limit, and, most importantly, your payment due dates to make sure that having many credit card accounts benefits you rather than hinders you.

Use each card to its full potential, keep your balances low, and always make full payments on or before the due dates.

This post is also available in: FR

Come to discuss that topic in our Facebook Group!
Jean-Maximilien is an expert in Canada and France about Loyalty programs, Credit cards and Travel. He is the Founding President of Milesopedia.

Suggested Reading