credits cards in wallet

Canadians and Credit Cards: How Many Should I Have?

“What’s in your wallet?” For most Canadians, the answer includes two or more credit cards. The average Canadian carries two cards for everyday purchases, according to a recent study. Is that smart? Is it too few? Too many? The answer depends entirely on your shopping habits—how you purchase and how you pay off the bills. A bit of advance planning can help you manage your spending, avoid interest charges and protect those precious credit account numbers.

Pay No Interest

Experts recommend using credit cards only when you can pay the total balance monthly. Canada Banker’s Association (CBA) reports that only 30% of Canadians are revolvers—users who don’t pay the entire statement amount due each cycle. The rest of credit users pay no interest. It’s noteworthy that the American Bankers Association (ABA) puts the United States revolver rate much higher at 41%.

If you use cards for basic monthly expenses, you get an interest-free loan until the bill comes due. Track what you spend per month to boost the odds of success. If you cannot envision paying off the balance altogether, it might be time to review some spending habits.

“Paid in full” is a goal that requires considerable discipline. Emergencies like an expensive and unanticipated car breakdown will continue to happen, so it may be tough to adhere to this ambitious goal every year.

AutoPay Practices

AutoPay is an excellent service for credit customers who have difficulty remembering to pay bills on time. Others just love the time saved. Monthly payments are deducted on a date you choose.

Automatic payments can take time to establish. The concept is that vendors store your credit card number or banking details and charge you monthly. AutoPay is excellent if you have enough money in your account to cover the deduction. Otherwise, bounced payment fees get and interest get added to your debt.

Intelligent Credit Plans

An estimated 1 in 3 consumers uses AutoPay for numerous accounts. If you’re one of them, imagine receiving a notice from one of the companies stating they’ve experienced a data breach. That business used your credit card number, and so did many others. You now need to cancel that card and update all the accounts linked to it. It could take the entire evening.

A sound credit card strategy is to have one card used only for AutoPay and another for purchases around town. That way, if one is lost, stolen, or someone compromises your data, you will need to update some accounts but not all.

Accidents and breakdowns happen when we least expect them. Here’s where a third card can come in handy. There are legitimate reasons why you may opt to revolve a balance on one card. A new water heater, for example, is expensive and you might need several months to cover that total. A third card lets you spread out payments without triggering interest on cards used more regularly.

Just don’t carry all three cards in your wallet. Leave your AutoPay card at home along with all but one credit card. Then, if that wallet’s lost or lifted, you will still have access to some credit and can skip the need to update all those automatic payments.

An Excess of Success

Another reason not to apply for a dozen credit cards is the impact such a move could have on your credit score. Each application appears in your credit report. Too many “hard” inquiries for credit will lower your credit score.

If new accounts are approved, they also factor into other score elements, including the average time an account has been open. Only apply for what you need.

Shield Yourself

The thought of having their credit hacked devastates many consumers. But would you know if one of your cards was compromised? Not necessarily. Not all businesses report data breaches, even if the law requires it. Many thefts never make headlines. If you’ve moved in recent years, you may not get a breach notice.

These are just some of the reasons why IDShield monitors credit account numbers 24/7. If we locate one of your personal details in a place where it should not be, we’ll alert you to the exposure and help devise an action plan for you. So, rest easy. We’ve got this.

IDShield is a product of Pre-Paid Legal Services, Inc. d/b/a LegalShield (“LegalShield”). LegalShield provides access to identity theft protection and restoration services. For complete terms, coverage, and conditions, please see an identity theft plan. All Licensed Private Investigators are licensed in the state of Oklahoma. This is meant to provide general information and is not intended to provide legal advice, render an opinion, or provide any specific recommendations.

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