Do I need Just One Credit Card at a Time or Multiples?

So you want to get a credit card? First, congratulations! That's a big step toward building up your credit. Now that you've made the decision to apply for a credit card, you'll need to choose from several options. The first thing people usually consider is whether they should apply for one or multiple cards at the same time. There are both costs and benefits associated with doing so.

With the credit card industry becoming more and more competitive in 2022, banks and other financial institutions in Canada are offering better deals on their cash back or travel rewards cards. Getting cashback can be as easy as using a certain card for everyday purchases. There is even no need to sign up for opening this 'cashback' account; it is already included in your bank's system (e.g. Scotiabank Momentum Visa Infinite*) without any fees attached.

Do You Need Just One Credit Card at a Time or More in 2022?

Whether it's a good idea to have one or more open credit cards depends on your personal situation. People who don't know much about handling credit will typically benefit from having only one line of available credit until they understand how installment payments and build some confidence in their ability to pay the bills. It might make them nervous to have several open credit cards at once, with their available credit approaching or surpassing their actual income for the month.

However, people who are already confident with managing multiple credit cards will often choose to apply for more than one card at a time. The reason is that many financial institutions offer sign-up bonuses on new accounts opened within a certain period of time. These deals can include bonuses in cash or rewards, which you can then use to your advantage when paying down your debts or simply redeeming them as part of your daily life.

For example, say you spend $1,000 on groceries per year using rewards points from an account's bonus category. If they were distributed as cashback, you'd get $10 per year for this expenditure. If they were redeemed to help pay the annual fee on the credit card, though, you would save $100 by using your bonus rewards points in this way!

Every institution has different rules regarding their sign-up bonuses. Some will offer cards with no fees to the first few who apply within a certain time period after opening an account with that institution. Others may require that carrying a balance month to month without paying off at least part of it -- making it only worthwhile if you are able to pay down your debts faster than your interest accumulates. Whatever type of bonus deal interests you most, make sure you do some research before applying so you know what restrictions come along with it.

If you do open several credit cards at the same time, you'll also want to ensure that your available credit does not exceed what you can pay off comfortably each month. This is where multiple payments come in handy: if you have $20,000 in total available credit and $2,000 per month of income after bills and mandatory investments are paid, then there's no reason why you shouldn't be able to handle three or four cards with a monthly limit of $10-$15k on them as long as those limits don't exceed your foreseeable future potential income. They will help build up your credit more quickly.

In general, people who accept two or three new lines of available credit within a few months' time can expect to see their credit rating rise more quickly than those who take only one card at a time. This is because multiple cards sent to the same credit reporting bureaus will show up as "new accounts" rather than different variations of the same account, which results in better scores for you. Note -- this does not mean that it's okay to open ten credit cards all at once, however! Even if they are sent to different agencies (and they probably won't be), you can still expect your score to drop dramatically over very short periods of time. If getting several cards quickly is important to you, aim for two or three new accounts opened within six months' time -- this should have almost no effect on your score whatsoever after the first month or two.

There are also disadvantages to applying for several credit cards at once, especially if your bank account isn't that stable. It might not be worth it if you don't have enough money in savings, since they can end up costing you a lot in fees over time (for example, with annual fees). Apart from these charges, some banks may even close your card without warning due to 'excessive' activity, particularly when there are too many cash advances within a short period of time. This way, you would lose your cashback and rewards points without being able to use them.

The bottom line: you can choose to have just one credit card, but it's advisable not to reopen the same account again and again throughout your life because it will prove an increasingly smaller boost to your score as time goes on (to a point where opening another zero balance account is actually more likely to show as a negative rather than a positive). If you do want several credit cards at once, make sure all of them are sent to different bureaus and that they don't exceed what you feel comfortable paying off each month. You should also try working on improving your income and reducing monthly expenses so that you see consistent growth toward financial stability rather than relying entirely on credit cards for the rest of your life.

What matters most is that you understand how credit cards work. Once you know what the fees are, the interest rates, and how to avoid mismanagement, you're well on your way toward improving your credit score. Take these steps, and someday in the near future, you'll be able to apply for just one or two great credit cards that will take care of all of your needs without complicating your financial status!