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How many credit cards should you REALLY have?

August 20th, 2014 by

Reevaluating the plastic in your wallet? This expert's answer may surprise you...


Open up your wallet, lay your cards out on the table, and count how many credit cards you have. What do you think? Too many? Too few? Not sure?

While credit cards are traditionally labelled as evil, financially-menacing things you should avoid at all costs (quite literally), they can prove to be more helpful to your credit score than harmful - if used properly.

Canada on credit

According to a recent BMO Annual Debt Report, credit card debt accounts for 52 percent of the average Canadian household’s debt load. That debt load sits at $76,140 - a 6 percent spike from last year’s $72,045.

Based on data from Canadian Bankers’ Association and Statistics Canada, CreditCards.com estimates each of us own, on average, 2.9 credit cards. More than 91 percent of us carry at least one credit card - up 6 percentage points since 2006.

A balancing act

While carrying a few cards might not necessarily  be bad news - for most, anyhow - the debt certainly spurs some concern. According to the Canadian Bankers’ Association, though 70 percent of Canadian cardholders pay off their balances in full each month, that still leaves nearly a third of Canadians carrying a balance. Thus the answer to the question of just how many credit cards we really ought to carry becomes ever more complex. 

John Ulzheimer, formerly of FICO and Equifax - and now a finance blogger for online and mobile money management system Mint.com - gets the same question over and over: What number of credit cards look best on a credit bureau? Having built a career as a credit expert, it’s one he’s heard on a weekly basis for years, he explained in a post.

And yet, even he doesn’t have a number for you. However, he does have an answer: as many as you can afford. Oh - and more is better (surprisingly enough) IF you play your cards right (i.e. responsibly).

Showing your cards

Ulzheimer suggests having as many as 5 - or more – general use credit cards (those issued by major credit companies, such as American Express, Visa or MasterCard) if you can manage that many without getting dizzy with the power and freedom of having such privilege… a feeling you might remember from your first credit card experience. It sounds like a lot (and it certainly is!) but Ulzheimer maintains: When it comes to the number of credit cards a person should carry (so long as they’re being responsible with them), the more the merrier.

His reasoning is sound enough: You’ll increase your credit capacity. You’ll increase your buying power. And you’ll increase the amount of “utilization insurance” you have cushioning your credit score.

For instance, you might spend $10,000 in any one month - but if you have $100,000 in collective credit space, you’ve still only used up 10 percent of your available credit - which means that $10,000 purchase won’t be as damaging to your credit score as it would be if it were maxing out your space (by, say, maxing out the one credit card to your name and its $10,000 limit).

3 factors to consider

Ultimately, the factors to consider when thinking about whether or not you should increase or decrease the number of credit cards you own are:

  • Can you handle the amount of credit you have?
  • Can you safely increase the amount of credit cards you have and still manage (i.e. pay off the balances in full every month)?
  • Could your utilization insurance use a boost? If your credit cards are maxed out, it likely could. Just don’t go maxing out those new cards or you’ll really be in trouble.

Playing your cards right

As always, it’s important to think long and hard about adding any additional credit capacity. But where a credit card with a balance is a burden - as it is for 30 percent of Canadian cardholders - an abundance of credit cards with a zero balance might be a blessing (but only if you can handle it please!).

Jun 26 2017 10:45am

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