How many credit cards do you need?

Whether you're just starting out with credit or you've been charging for years, you probably have asked yourself: how many credit cards do I need? The answer is, it's different for everyone.

If you like to collect points, miles and/or cash back, you may need two or three different types of reward cards. If you travel, you might want an airline rewards card plus a card that doesn't have foreign transaction fees. If you don't travel, don't want to mess with rewards and know that all your favourite haunts accept your trusty Visa, you might be fine with just one card.

How many cards do you need? To find the answer that's right for you, weigh the pros and cons of wielding multiple cards versus having a single card, and be honest with yourself about your spending habits, income and needs.how-many-cards

Why you might want an array of cards
It's not necessarily a bad thing to have several credit cards, and it is a myth that if you already have a handful, a creditor will not grant you more.

As long as you pay each statement in a timely manner, have a low debt-to-credit (or credit utilization) ratio and never miss a payment, you should already have a good-to-excellent credit score. With your history of good credit behaviour, there's a high chance that you'll be approved for a new card, even if you have a few already in your wallet.

Four reasons to have multiple cards in your wallet include:

1. For financial security.
Keeping an extra card tucked away can help in case your wallet is stolen, or if your primary card gets flagged for fraudulent activity. It's also reassuring to know you have that extra $1,500 credit limit in case of emergency, such as a flat tire or broken refrigerator.

2. For rewards.
"Every card has benefits and features," says Danny Devincenzo, a financial adviser with Edward Jones in Strathroy.

Features such as travel rewards are a reason he would consider getting an extra card. With rewards cards, you can accumulate points and cash them in for free flights and merchandise or rack up cashback points while you spend.

Rewards aficionados may want to have different rewards cards for their different purchases to get the most bang for their buck: a grocery rewards card, a travel rewards card and a cashback rewards card, for instance.

However, the interest rates with rewards cards may be high, so you may want to use a card with a lower interest rate for items you can't pay off right away.

3. For work expenses.
If you use a personal credit card for work expenses, make it a separate card from the one you use for your personal expenses. This will make it easy to avoid mixing the two accounts. Credit card websites often make it easy to track expenses on each account for handy bookkeeping, too.

4. For travel and shopping in other countries.
If you travel frequently, you may want a card that doesn't charge foreign transaction fees. And even if you don't travel a lot, a card waiving foreign transaction fees can come in handy if you shop in the U.S. (online or in stores) or other countries.

Sometimes, one card is all you need
Having more cards should not hurt your credit score, but you don't need multiple cards to have a stellar credit history.

"The simple fact of paying it off every month, that's going to go to your credit score," says Devincenzo. "For me, I really don't see the point of having more than one or two cards."

Three reasons to stick with one card:

1. To have more control over your debt.
If you can make only the minimum payments on your three cards, it might be wise to consolidate your debts onto one card.

"If you make the minimum payment every month at 20 percent interest, it's going to take you a lifetime" to pay off a large balance, says Devincenzo. Multiply that by three different credit cards, and you're looking at an almost insurmountable amount of debt.

With all your debt on one card, though, you may be able to make more than the minimum payment and clear the debt faster. Even better? You may be able to transfer your card balances to a card offering a lengthy 0 per cent interest period. Fewer cards to juggle might also lower your stress level, since you're worried about only one payment.

2. To more easily track spending.
If you have trouble keeping track of all your cards and find you're forgetting to pay the balances, slimming down to just one piece of plastic can help with that.

"It's easier to keep track of one or two than it is multiple cards," Devincenzo says.

Not only will it be easier to keep up with one statement instead of several when it's time to sit down and pay bills, but you'll also be able to see where all your money is going with one glance, instead of pulling up three or four statements and trying to add up exactly how much you spent that month.

3. To avoid losing money to fees, fraud.
Finally, if you aren't actually using any of your multiple cards, you could be susceptible to inactivity fees, or paying annual fees on cards you aren't using.

Having one card also reduces the chance of fraud that comes with juggling multiple pieces of plastic and statements. If you're not minding your handful of accounts, it could be months before you realize that someone is using your card. By that time, the thief could have maxed out the card, thrown off your credit utilization ratio and, of course, damaged your credit score.

How many cards do you need? There's no universal right or wrong answer. What makes the most sense for you: One card to minimize the hassle of tracking several accounts? Multiple cards to rake in the rewards? You decide.

See related: 6 steps to close your cards the right way; Watch out for these 7 mistakes when applying for a credit card

Updated August 23, 2016

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