How many credit cards is too many?

How many credit cards do you have?

Like most people, I regularly receive mail-outs from banks offering me a fancy new credit card, but I always toss them into the recycling bin. I've had one credit card with one bank for almost 20 years, and I've never really felt the need to have another. It appears, however, that I'm in the minority.

According to the Canadian Bankers Association, there were 71.3 million credit cards in circulation as of 2010. That's a lot of plastic in a country with a population just under 35 million. Clearly, many of us have a couple of cards in our wallet, maybe even three, four or more. Lately I've been wondering if I should make a move and get a second card, or whether it's just asking for trouble.

Jeffrey Schwartz, the executive director of Consolidated Credit Counseling Services in Toronto, says there are benefits to getting a second credit card: To build credit, to take advantage of travel or other rewards, to have a spare in case your card is lost or stolen or to keep expenditures organized (using one card for business and one for personal expenses, for example).

As well, he says a second card can be useful if you want to give a card to someone, but still keep an eye on their spending – a child in university, for example.

However, all those benefits are counterproductive if having more than one card causes you to rack up more debt, Mr. Schwartz said.

"The reality is, do you really need more than one? Probably not. Are we encouraging people to have more than one in our office? Absolutely not," he said.

If you're only paying the minimum each month on the one card you do have, that's a clear indication you should not have more than one, said Mr. Schwartz. To maintain an excellent credit score, you don't need multiple credit cards – you just need to be paying your bills on time and keeping your balance low.

"We encourage people to pay off their balance each and every month because the interest rates are what they are," he said. "The minute you start only paying the minimum each month, you could see the purchase cost of a specific item almost triple based on all the interest you're paying on it."

Mr. Schwartz has seen the negative impact of multiple credit cards on some of his deeply indebted clients, and says the danger is when people view their credit limit as "free money."

"When they think it is free money and they're running short on one credit card, they'll use another one to pay it off," she said. "That is one of the quickest ways to spiral downwards in your financial situation."

Multiple credit cards intensify the temptation to shop impulsively, said Mr. Schwartz, to fulfil our "wants" instead of our "needs."

"It's our wants that are driving our purchases right now and that's getting us into trouble," he said. "If we have room on our credit cards to do that, and we have more than one credit card, it adds even more availability to feed these temptations."

Bottom line? Stick with one card, said Mr. Schwartz.

"Put the leash on."