Should you have multiple credit cards?
Did you know that Canada has twice as many credit cards as people? That means you’ll likely find more than one credit card in someone’s wallet, and it’s not necessarily a bad thing.
Improving your credit utilization rate
One factor determining your credit score is your credit utilization rate: the ratio of debt you carry to the total credit you have available. A lower rate demonstrates responsible credit use and can have a positive impact on your score.
By spreading your purchases over multiple cards, you’re effectively lowering your credit utilization rate. And that’s what you want! Just try to keep your spending at about 30% of your credit limit or less on each card.
Does holding too many credit cards affect your score?
Over the long run, no. Every time you apply for a new credit card, you receive a hard hit on your credit score which will bring your credit score down. But by using a credit card responsibly, over time, you can build it back up.
But there’s always a risk. Having access to multiple accounts can heighten the temptation to spend, putting you at risk of living beyond your means. Plus, keeping track of due dates and payments across multiple credit cards can make it easier to miss a payment, so you’ll need to be mindful of what you can manage. Building a budget is one way to keep track of your upcoming payments.
But if you can handle it, optimizing your credit utilization rate is a smart credit-building strategy. Having multiple credit accounts and minimal debt on your report shows lenders that you’re a responsible borrower; that you have the discipline to take on more credit when you need it. And if you need a reminder to stay on top of your payments, taking advantage of banking alerts, like those offered in our online banking app, can be a huge help.
While multiple cards can be a double-edged sword, when used responsibly they’re powerful tools in your financial management plan. So, next time you’re weighing the pros and cons of another credit card offer, think about your own capacity to take on additional credit, and how it can help you down the road.
* If Quick Check pre-approves a card, you can be sure we’ll approve your application, except in limited circumstances. Some of the reasons we may not approve your application, among others, include:
a. There’s been a change in your credit file information, personal information or financial status from the time you receive your Quick Check results to the time you apply for one of our credit cards.
b. You’re not at least the age of majority in the province or territory you live in.
c. Your application is flagged for fraud prevention.
d. You have an existing Capital One account.
e. You’ve applied for a Capital One account in the last 30 days or had an account with us that was not in good standing in the last year. In good standing means not past due, over limit, fraudulent, restricted, or part of a consumer credit counselling program or bankruptcy.
In some cases, we may not be able to open an account for you even though your application was approved. This can happen if we’re unable to verify your identity, or you don’t provide the required security funds if you’re approved for a Secured Mastercard®.