How Many Credit Cards Should I Own in Canada
What’s your view on credit cards? Are they tiny jewels of plastic wonder that support your life’s purchases, or something a little more dangerous, to be used sparingly? If you were to think of them as Pokémon, would you want to catch them all or just keep a chosen one or two?
Whatever your stance, there are distinct advantages to utilizing credit cards. But how many credit cards should you own, one, five, or three? It’s a magic number. Let’s figure out yours!
Why should you utilize a credit card?
Unless you’ve got some shopaholic confessions to make and know you’d max out all your cards and miss your payments, having at least one credit card is valuable. Credit cards are excellent tools to build your credit score. Everyone from your landlord to your car loan company takes your credit score in to account. Your score tells them if you’re trustworthy, good with your money, and worth supporting.
What are the perks of having multiple credit cards?
Your credit utilization ratio
If you only have one credit card, but you find yourself maxing it every other month, it could be beneficial to have two. Alongside your credit score, you have a credit utilization ratio. This figure equals the total amount of credit you have access to.
It’s recommended that you only use 30% of that total figure. If you’re using all the credit from one card, then you’re well over 30%, and it might be time to up your game and add a second credit card. The secret? Still only spend the same amount of money, but spread it over the two. By doing this, you’ll increase your credit utilization ratio and decrease the percentage you’re actually using, which in turn will help your credit score.
The perks of many
Having a few credit cards means that you can access different perks and advantages. For example, if you have three cards, one might give you cashback or rewards, one may have no fees on foreign transactions when you travel, and a third might have low interest on big purchases you make. Aim to purchase something on each one monthly and pay off that balance every month so you can increase your credit score!
Having multiple credit cards means that you have access to greater credit levels, which could be valuable if you have large back-to-back payments coming up. This could be in the form of moving houses, getting married, or helping your little terror . . . I mean child with expenses.
Things to think about before you get multiple credit cards
How do you spend?
How would you rate yourself when it comes to spending money and staying within your means? If you know you’re not the most organized, or you’re prone to impulsive sprees, having multiple cards might not be for you. There’s no point in having more cards if it’s only going to worsen your credit score.
Spreading out your applications
Once you’ve read this post, please don’t dash off and apply for three credit cards all at once! Obviously, you now know the benefits of multiple cards, but you need to space out your applications. Applying for a credit card equals a hard look at your credit history, which can temporarily ding your score. If you were to apply for multiple in a short space of time, it could look suspicious or risky.
And take note, if you plan on taking out a large loan in the near future, it’s not worth getting a new credit card.
Can you keep track of everything?
Multiple cards mean multiple bills, multiple annual fees, and multiple ways to spread your purchases out. Are you someone who can keep track of all these things and remember what to pay when each month? If you’re hesitating, then it might be better to stick to one or two cards. There are loads of tools out there to keep you on top of your finances, and it’s definitely worth utilizing them.
So, what’s your perfect number?
The perfect number of credit cards depends on varying factors. The ideal amount for you could be different from your partner, your mom, or your best friend. We all spend and keep track of finances differently. Take the time to hone in on what you know about yourself and your spending history, what could boost your credit score further, and what the future looks like. The perfect number will become clear!
-Kyle Green
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