Should I have more than one credit card?

Is it a good idea to have more than one credit card?

This question may come up naturally during the course of your day-to-day spending. In fact, many people may keep multiple credit cards on hand to suit different purposes. 

For example, one card might offer maximum rewards on grocery spending while another card rewards travel spending, so consumers might switch between the two cards based on the type of purchase. Some people like to have an additional card for shared family expenses, or to keep on hand for emergencies, among many other reasons.

Having multiple credit cards can have its benefits. For example, if your primary card is lost or declined, you'd have a backup ready to go. 

However, getting additional credit cards may lead to increased spending and could negatively impact your credit score.

Ultimately, the number of credit cards you carry is a personal decision, based on your unique financial situation and goals. Equipping yourself with all the info means you can make the best decision about how many cards you should have in your wallet. 

How many credit cards do most Canadians have?

Payments Canada reported that in 2022, 100 million credit cards were in circulation across Canada — a five percent increase year over year. Considering more than three quarters of the population is 18 or older, which is the age at which you can get a credit card in Canada, this suggests that most Canadian adults hold at least two.

This trend isn’t entirely surprising. During the COVID-19 pandemic, many retailers shifted to debit and credit payments, reducing reliance on cash. As a result, some Canadians may have applied for additional credit cards to ensure they had multiple payment options.

At the same time, many chose to limit their activities and weren't travelling, which resulted in savings. Some of that money was used to pay down debt.

However, following the pandemic, inflation increased rapidly, creating financial strain for many. According to a report from the Bank of Canada, the reliance on credit cards has increased steadily since the initial decline in 2020.

The same report found that in 2023, Canadians who carried an outstanding balance on their credit cards had an average of 2.4 cards compared to 1.7 cards of those who paid their balances in full each month.

Benefits of having more than one credit card

Having more than one credit card can potentially provide several advantages, from maximizing rewards to expanding your credit portfolio. 

Here are some key benefits of having multiple cards:

• Diversified rewards: Depending on the card, you can earn rewards, such as cash back or points that could be used towards groceries, gas, and travel. Using multiple cards lets you diversify your rewards based on what's most important to you.
• Better credit utilization: Your credit utilization ratio—the percentage of credit you use relative to your total credit limit—is crucial in determining your credit score. Generally speaking, the lower the ratio, the better the credit score. Having multiple cards boosts your total available credit, which can reduce your utilization ratio and potentially enhance your credit score.
• Backup options: If your primary card is lost, stolen or unexpectedly declined, having a second card gives you an alternate payment method. 
• Card acceptance: Not all merchants accept every type of credit card, which means you could end up without a payment option at the end of your special dinner. Having different cards from various payment networks (Mastercard, Visa and American Express) could help to ensure you'll be able to pay for your carbonara at night's end.
• Intro offers and perks: Each card offers unique benefits and welcome bonuses.  If the card offerings appeal to you, it’s often worthwhile to maintain multiple cards—as long as you consider the cons of doing so (see below).

Cons of having multiple credit cards

Using multiple credit cards also has several potential drawbacks that require careful management. Understanding these cons can help you make an informed decision before you apply for a new card.

• Potential for debt to get out of hand: Access to increased credit might encourage some individuals to spend more as they pursue attractive offers or benefits. This extra spending could harm your budget. 
• High interest rates: If you’re applying for a new credit card because you're low on funds, it may not be the best decision. Credit cards can carry high interest rates vs. other credit products, so without a solid repayment plan, you might end up in a cycle of debt.
• Additional annual fees: Many credit cards have annual fees. If you’re holding multiple cards, those yearly fees could add up, and the perks you’re getting may not be worth it.
• Overlapping rewards: Multiple cards offering similar rewards and benefits may be redundant. Some people like having different cards to maximize their rewards, but other people might find it too time-consuming to get the payoff. 
• Difficulty keeping track of due dates: You need to juggle multiple statement dates. Missing a due date will result in interest charges and may negatively affect your credit score if you miss several payments. Consider setting up automatic payments every month so you don't forget to pay. 
• Higher risk of fraud or identity theft: Having more credit cards means more accounts that fraudsters could potentially target. If any card details are compromised, dealing with the fallout and repairing your credit can be time-consuming. No matter how many cards you have, it's important to read your monthly statements carefully, and set up alerts for any suspicious activity.

What to know before getting a second credit card

Lenders usually conduct a hard inquiry on your credit profile when you apply for a new credit card. As a result, your credit score may drop slightly. If your credit score is in good standing, this may not have much impact. However, if you have a lower credit score, it could decline even further, which is not ideal. 

When you apply, lenders evaluate your credit score, income and existing debt to assess your ability to manage additional credit. Individuals with strong financial profiles usually have better chances of approval, but even then, it’s not guaranteed.

For example, if you’ve applied for multiple credit cards in a short period, lenders might consider that a red flag, as it indicates you’ve been trying to access a substantial amount of credit. This could be one reason your application is declined. To safeguard your credit score and boost your chances, it’s wise to space out your applications and apply only when necessary.

Use caution when adding more cards to your wallet. Extra credit cards can carry the risk of increasing your spending. Consider requesting a lower credit limit on new cards, which can help keep overspending in check.

As mentioned above, managing multiple cards also means tracking different payment due dates. Setting up automatic monthly payments for the entire statement balance can make things easier and help you avoid fees and interest charges.

However, if you’re responsible with your spending and have a good credit score, then applying for another card will likely have minimal impact on your overall financial health.

How to manage multiple credit cards wisely

Managing multiple credit cards can sometimes be burdensome, but with the right strategy, organizing what's in your wallet can help ensure you aren't overwhelmed.

• Use each card for specific purchases: Dedicating cards to particular tasks, such as daily expenses and joint purchases makes management easier.
• Track spending with apps or account alerts: Use your credit card apps to quickly check your spending and see how much available credit you have left. 
• Set up account alerts, like Tangerine's Orange Alerts: These can notify you immediately when you make a purchase, alert you to any suspicious activity, and can also help you keep your budget under control.
• Pay more than the minimum requirement: You should always strive to pay the full balance of your credit card statement each month by the payment due date to avoid interest charges. However, if you find yourself in a difficult situation, pay at least the minimum amount to keep your account in good standing.
• Review statements monthly: Many credit card providers give you 30 days to dispute any fraudulent transactions, so review your statements each month. If you find anything suspicious, contact your credit card fraud department immediately.
• Track all due dates: Set calendar reminders to ensure you never miss a payment deadline. Setting up automatic payments also helps keep your accounts in good standing.
• Understand each card: Take some time to get to know your cards’ terms and rewards, so you’ll always know which card to use in any situation.

Applying for a Tangerine Credit Card

If you're considering another credit card, a Tangerine Credit Card might be right for you. Both the Tangerine World Mastercard^® and the Money-Back Credit Card allow you to earn unlimited cash back and don't come with an annual fee. Once you're a client, applying takes just a few simple steps.

1. Select the Credit Card that interests you. 
2. Click “Apply Now.”
3. You'll need to sign in if you’re already a Client. If not, becoming a Client is simple.
4. Enter your personal information.
5. Once you are approved for the Card, choose two 2% Money-Back Categories to start earning Rewards on your purchases.
6. When your Card arrives, activate it.

Is a second credit card right for you?

Having more than one credit card is a personal decision which requires you to consider your needs and the bigger picture of your finances. While another card can give you access to more perks and credit, it can also come with more responsibilities that shouldn’t be taken lightly.

If you'd like the benefits of an additional credit card and are confident you can manage all your payments, consider one of Tangerine’s Credit Cards. They have no annual fee and flexible cash back categories that complement most lifestyles.

Mastercard is a registered trademark of Mastercard International Incorporated.

Visa is a trademark of Visa International Service Association.

Amex is a registered Canadian trademark of American Express Company.