Having more than two credit cards in your wallet is often frowned upon by budget and financial advisors. Is it so bad?
In this era of overconsumption and overindebtedness, having several credit cards can be dangerous. Especially since Canadians love their cards: they are the world champions in this regard, according to the investment site Invezz. In January, TVA Nouvelles indicated that they collectively held a balance of $100 billion on their credit cards.
There are 76.2 million Visa and Mastercard credit cards in circulation in Canada, or about two per person. Fewer than one in five Canadians do not have a credit card.
Some people can hold up to ten cards. But rumor has it that holding more than two can affect your credit score. This is false, according to Marie-Ève Leclerc, editor-in-chief of Milesopedia.
“You can hold several, as long as you reduce their balance to zero each month,” she explains.
Analyze your needs
In fact, having several cards above all allows you to benefit from different reward programs.
“You can save several hundred, even thousands of dollars annually,” adds Ms. Leclerc.
However, you must have the right cards. Marie-Ève Leclerc suggests analyzing your personal consumption every two years using your credit card statements. And change cards accordingly, focusing on those that are the most generous.
We must therefore know our expenses in the main areas of interest: groceries, gasoline, travel, renovations, outings, electronics, IT… Because certain cards are more advantageous in a particular sector, notably for groceries and gasoline: take advantage of those that offer cash back.
That said, it is best to keep your oldest card to maintain your credit history. If it has annual fees or if you no longer use it, ask your financial institution to replace it with another, without closing your account.
You can also keep it by channeling your subscriptions there (illico, cloud computing). Because keeping a card without using it negatively affects your credit score. Just like changing cards. But this score will quickly increase, while you benefit from a more generous rewards program.
Is it possible, however, to manage several cards without forgetting to pay on time? You can simply use the alert or pre-authorized payment services offered by issuers, or enter an alert in your phone’s calendar.
ADVICE
- Financial institutions offer around 200 credit cards. The best way to select the one that meets your needs is to use an online comparator, such as that of Milesopedia.
- Having multiple cards helps avoid using more than 35% of the credit granted, which negatively affects your credit score.
- If you are unable to reset the balance on all your cards each month, pay off the one with the highest rate and leave it in a drawer. Do the same for the other cards. If you have lost control, contact the ACEF in your neighborhood or municipality: uniondesconsommateurs.ca. Getting multiple credit cards in a short period of time affects the average tenure rate, therefore lowering your credit score.
- If you cancel a credit card, your credit score will drop slightly for just a few weeks.
