Table of Contents Contents
When you’re considering having more than one credit card, the most crucial part isn’t how many cards you have; it’s what your total balance is. If you aren’t maxing out all of the cards and paying them in full every month during their billing cycles, then how many credit cards you have isn’t a huge issue.
Is 5 Credit Cards Too Many?
Whether or not 5 credit cards are too many depends on whether or not you can manage that much debt. If you’re someone who maxes out their credit cards, then 5 credit cards are probably too much for you. However, if your primary use of the credit card is to earn points, then 5 may be a good option for you.
Those who use credit cards to earn points usually use different cards for different purchases when it comes to their everyday spending. For example, you’d use the credit card that earns the most points at grocery stores solely for grocery purchases, a gas credit card for gas purchases and so on. This can actually save you money in the long run, as long as you make your payments on time in full.
Having Many Credit Cards With a Zero Balance
You might be surprised to learn this, but having a lot of credit cards with a zero balance isn’t a bad thing. That said, you do have to use the cards once in a while in order to keep them active. If you don’t use them, then the credit card issuer could cancel them, which would end up hurting your credit score.
Having a lot of credit cards with zero balances can also benefit your credit score by keeping your credit utilization low. It also demonstrates to lenders that you’re responsible with money. This demonstration of financial security is also shown in the fact that your credit score will be high.
How Many Credit Cards Should You Have in a Year?
If you’re looking to get new credit cards, you mustn’t do too many credit checks too quickly. This is because each hard credit check reduces your credit score by 5 to 15 points. That said, it’s recommended to only get two or three credit cards in a year because too many hard inquiries (multiple hard inquiries) can be damaging to your score.
As long as you keep these cards in good standing and make your payments on time, you’ll be able to keep your score up and get more financing in the future if you need it.
Is 7 Credit Cards Too Many?
Whether or not 7 credit cards are too many depends on the person. For someone who is tempted to spend money and has a hard time making payments on time, then 7 credit cards are probably too many.
For someone who uses credit cards strictly to earn rewards and the credit benefits, then 7 credit cards could very well end up being the perfect amount. Not only do they give you more buying power, but having more accounts can make it easier to get other financing, such as an auto loan.
How Many Credit Cards You Should Have at Age 25
For those who are 25, you’re generally just getting your feet wet in the credit world. For this reason, it’s also recommended to have a limited number of credit cards for your credit needs. Having two or three credit cards that you can manage correctly can do wonders for your credit score and increase your chances of getting more credit.
While this isn’t a hard and fast rule, credit card experts say this magic number can help you create better financial goals and habits. It’s a good starting point on your credit journey.
How Many Credit Cards You Should Have in Your 20’s
When you’re just starting in your 20’s, you should start with one credit card. Once you’ve learned to use it and are starting to build your credit score, then you can gradually get more.
Even then, just casually getting a new one is a great idea. You don’t want to get too much credit at once and end up setting yourself up for failure.
How Many Credit Cards is Too Many?
How many credit cards is too many depends on the person holding the credit cards. In fact, as long as you use them correctly, there’s really no amount of credit cards that’s considered to be too many. For some, this number could be 2, and for others it could be 10. It’s just based on how you use the cards and what you use them for.
The Right Amount of Credit Cards for Good Credit
While there’s no limit on how many credit cards you can have for good credit, for the average person, having two to three different credit cards is the perfect amount. This is because it leaves you a decent amount of room for your credit utilization ratio, and it prevents you from accumulating more debt than you can pay.
Let’s say you have 3 different credit cards. One card has a limit of $2,500, one has a limit of $7,000, and the last one has a limit of $5,000. Your total available credit limit then becomes $14,500. Even if you max out the $2,500 and the other two cards are unused, your total credit utilization rate is only 17.24%. This leaves you under the recommended limit of 30%. If someone else only had a $2,500 credit limit and it was maxed out, this would make their credit utilization 100%.
This is why having more than one credit card can be beneficial. It isn’t how much you owe that affects your credit score; it’s how much you owe compared to how much you have available. As long as you aren’t maxing out all of your credit cards at the same time, then you can improve not only your finances but your credit score as well. Ultimately, it’s a personal decision that can let you earn more rewards and other benefits.
The 15-3 Rule for Credit Cards
The 15-3 rule is a common myth that credit card users use to improve their credit score. This rule claims that making two credit card payments, one 15 days before the due dates and one 3 days before, will improve your credit score. Unfortunately, this isn’t the case, though, because credit card issuers only report once per month to the credit bureaus.
In fact, there are two reasons why this rule doesn’t work. The first reason is that your credit card statement will already be reported to the credit bureaus 15 days before the due date. The second is that making more than one payment per month won’t improve your credit score. However, there is a time when you can make a credit card payment that will improve your credit score.
The best time to make your credit card payment is before your statement's closing date. If you look at your credit card bill, you’ll be able to find this date. There will be a date every month when your statement is posted.
This is also considered to be your statement closing date. So if it’s the 23rd of every month, then making that payment a week to three days before will bring the most benefit to your credit. It’s important to give it a few days because a payment isn’t usually posted the same day. Before the amount is posted on your statement, you want to be sure it equals 30% or less of your total credit utilization.
The Number of People with $10,000 in Credit Card Debt
While there aren’t specific numbers as to how many Canadians have credit card debt of $10,000 or more, it’s estimated that at least 14% of Canadians have at least that much in credit card debt. The age group of those between 26 and 35 have at least $17,000 or more in debt.
One of the main reasons why it’s so difficult to determine how much Canadians owe in credit card debt is that credit card debt is revolving. New charges are incurred every month, while others are paid off, making it hard to pinpoint an exact average amount owing every month.
The 2/3/4 Rule for Credit Cards
The 2/3/4 rule for credit cards is a rule that some banks use for credit card applications. The rule refers to having no more than 2 applications in 2 months, 3 in a year and 4 in two years. That said, not all banks follow this rule.
However, it does help your credit score cuz too many credit applications in a short period of time can take a significant hit. In fact, each hard credit check can reduce your credit score between 5 and 15 points.
How to Get Approved for More than One Credit Card
Even if you have one credit card, this doesn’t mean that you’ll automatically get approved for multiple cards. When you’re looking to open new credit card accounts, issuers look at your credit history, full credit report, and payment history. This will also show lenders your current credit accounts, spending habits, and even your credit score. The average length of your credit history is also important to getting more cards.
Since multiple credit cards affect your credit score, credit companies will check with the credit bureaus before you’re approved. A good credit score shows lenders that you’re financially responsible and can handle the monthly payments on your credit card balances. This is important for them to see before they give you more credit.
Reasons it’s Important to Make your Credit Card Payments
Depending on your financial situation, it can be difficult to make your payments on time with just one card, let alone multiple accounts. However, it’s important that you make these payments on time. Not only is it crucial to avoid late payment fees, but it’s also great for good credit habits. While it’s just a temporary ding, they can add up quickly.
A good way to avoid missing payments is to set up automatic payments. Late payments can also result in you losing rewards, so it’s important to keep track.
While making the minimum payment amount is important, due to interest rates, it can actually be costly. If you’re unable to, then getting a balance transfer card for balance transfers might be a good idea since they have a low intro APR. Doing this, though, adds more credit cards since it’s technically a new credit card. So a good payment history is key to approval. It will also increase your total credit limit if you keep your current credit card, to help your credit score.
Final Thoughts
While credit cards are great financial tools in Canada, they can also hurt your credit and your pockets if they aren’t used correctly. If you make your monthly payments and keep your credit utilization below 30%, then credit cards can be one of the most powerful credit tools that you have access to. Maxing them out, on the other hand, can do more harm than good.
Having a maxed-out credit card can be expensive when it comes to interest charges. Having more than one maxed-out card can make handling your finances difficult. This is why there’s no rule as to how many credit cards are too many. It all depends on how you’re able to handle the debt. For some, 10 cards is the right amount, and for others, the best number is 2.
