Graham Christian, Content Strategist
The world of credit cards is vast and varied. Some will earn you rewards on everyday expenses like groceries and gas, while others can help you save when making travel purchases. There are even cards out there that can net you points or cash back simply for spending at a specific retailer.
Of course, it would be very difficult for all of these benefits to be covered by a single credit card. That’s why many Canadians carry more than one. Keeping a few different credit cards for select purposes is a great way to game the system in your favour and maximize your rewards. But how long should you wait between applications? Are there any rules or best practices to follow?
Below, we’ll talk about how to time your applications for a second or third (or fourth!) credit card without hurting your credit score or chances of approval. So let’s dive in.
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How long you should wait
Depending on your credit score and income level, experts recommend waiting between 3 to 6 months between applications. The higher your score or income is, the less time you’ll need to wait, but it’s generally recommended to keep your applications at least 3 months apart. Applying more frequently than that implies you’re eager to get as much credit as possible, which can make providers hesitant to approve you.
Will applying for multiple credit cards hurt your credit score?
Providing you wait at least 3 to 6 months between applications (depending on credit score and income level), it shouldn’t affect your score much at all, but applying for multiple credit cards at the same time can do a lot more damage.
With each application, your credit provider must run a hard credit check. While one of these every once in a while will only have a minimum impact (especially if you have good credit to begin with), too many inquiries at once can hurt your score and make you seem less reliable, affecting your applications in the future.
Reasons to own more than one credit card
You want to build your credit
Responsibly owning more than one credit card can help you build a good credit score by maintaining your credit utilization ratio, which represents the percentage of available credit you use per month. Experts recommend keeping your utilization at around 30% of your total available credit, so having more than one card (and thus more available credit) means you can spend more without going over your desired ratio and hurting your score.
You want to maximize rewards
Different rewards credit cards have individual “superpowers” that can help you collect points or cash back on specific types of purchases, so keeping a few active at the same time (and knowing when to strategically use them) can help you save big in the long run.
For example, you can use a high-earning travel rewards card when making flight and accommodation purchases for an upcoming trip, then utilize a card with no foreign transaction fees to make purchases once you’re abroad.
You want increased buying power
Owning more than one credit card means having access to more credit, which increases your buying power when you need to make a few big purchases at once (or in an emergency situation that requires spreading out a big expense over a few different cards).
You want more payment options
All cards aren’t accepted everywhere, so having a few different options to use no matter where you are comes in handy. For instance, while American Express cards can offer excellent rewards, many businesses in Canada don’t accept them. In this case, having a Visa or Mastercard in your wallet can save you in a pinch. It’s also a good idea to have multiple cards in the event that you need to freeze one of them due to loss or theft.
Reasons to wait before applying for another credit card
You have a low credit score
Credit card companies will typically conduct a hard credit check every time you apply for a new card, and these tend to shave a few points off your credit score. If your score is good to excellent, you’ll be able to rebound from this in no time. If you happen to have a lower score, however, a hard credit check could do more harm.
It’s always a good idea to pull your credit report before applying for any new cards. This way, you’ll have a clear and current picture of your credit score and can avoid cards that you may not be approved for (you could also use Ratehub's quick and easy eligibility checker). If there’s a chance you could be rejected for the card you’re interested in, your best bet is to wait and build your score up before applying.
You’re planning on applying for an auto loan or mortgage soon
If you’re going to be applying for an auto loan or mortgage in the near future, you may want to hold off on that new credit card application. Credit card companies run hard credit checks on new applicants, and these can temporarily knock your credit score down a few points. Any damage to your credit score (even temporarily) can affect the rate you'll get on a mortgage or auto loan, forcing you into a situation over time where you’ll be paying thousands of dollars more than you should be, so best to wait until you’ve secured a good rate before taking on a new card.
You’re struggling to manage the card you already have
While there are plenty of benefits to owning multiple credit cards, they won’t be much help to you if you’re struggling under a mountain of debt. Each new credit card means one more bill and one more responsibility, and that juggling act can quickly turn disastrous if you lose track of statement due dates. Not only that, but having missed or late payments on your credit report won’t look great to new providers when they’re deciding whether to approve your application. If you’re having trouble maintaining the credit card you have (missing payments, accumulating interest, etc.) it’s best to get a handle on it before applying for any new ones.
The bottom line
Responsibly owning multiple cards can not only build credit - it can also help you save money in nearly any situation. At the same time, it’s important to do your research and make sure it’s the right moment to apply. Depending on your income level and credit score, be sure to wait the appropriate amount of time between applications to make sure your credit stays healthy and your chances of approval are as high as possible. Follow our tips above, and be sure to share any of your favourite credit card combinations or advice in the comments below.