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How Many Credit Cards Should I Have - Coast Tradelines

Dec 19

How Much Credit Cards Should I Have? The Intersection of Credit Cards and Tradelines Explained


A question that is often asked by people in personal finance is "How many credit cards do I need?" This question becomes more pertinent when you are thinking about adding tradelines to your credit profile. Let's decode this issue and provide you with the knowledge and guidelines to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit cards you carry is not just one of your personal choices for convenience. It also influences your credit score. While you're aware that a credit line can help your credit score, you're likely confused as to how many credit cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we look at how many credit cards you need to have let's look at the benefits and downsides of owning a variety of credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're using multiple credit cards, your credit limit can be greater. A credit limit that is high is ideal for emergencies or large purchases.
  • Use credit cards that have rewards as well as cashback to save on things daily.
  • Your ratio of credit utilization will increase. Your credit utilization ratio refers to the amount of available credit that you are currently using. Making use of a variety of credit cards could increase your credit score through splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards could make it more likely to spend more than you can afford and then fall into debt.
  • It's not difficult to make unexpected purchases you can't afford when you have many credit cards.
  • Making multiple payments with credit cards can require more time and effort. Particularly if the payment times are different.
  • The more cards you have can lead to a high rate of utilization. A high CUR can affect your credit score.
  • Different cards come with different perks. The lack of cards means missing out on many advantages.
  • On the other hand having too many credit cards can make the task of calculating payment due dates a struggle. This can result in penalties for late payments and a deterioration of credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diversity of Benefits: Find cards that offer various benefits, including travel rewards, cashback, or low-interest rates.
  2. Annual Fees Be sure that the card's benefits exceed any annual fees.
  3. Interest Rates A low APR is essential unless that you'll be able to pay off the balance each month.
  4. Credit Limit: A higher credit limit could boost your credit utilization ratio, so long as that you don't max it out.

Average Number Credit Cards Should I Have

After having looked at the pros and cons of owning multiple credit card accounts, let's see the number of credit card you should have. How many credit cards are excessive, and how many are enough?

Financial experts recommend having 3 to 5 credit cards for an extensive credit profile. This can provide a variety of advantages and also improves the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

Numerous factors should be taken into account when deciding how many credit cards to keep. These include:

  • Credit score and past history: Your credit score, history and scores will determine how many credit cards you can have. You'll only be able to qualify to get one or two credit cards in the event that have low credit scores or a short credit history.
  • Budget and income: Your income and expenses will also be important. If you have a high income and very low expenses, it is possible to handle more credit cards than someone with a lower income and more expenses.
  • Priorities and financial goals: Your goals in terms of finances and priorities also affect how many credit cards you should have. If you're trying to improve your credit score and earn rewards, you should consider having several credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some suggested numbers of credit cards that are based off of different scenarios:

  • For those with no credit history If you don't have a credit history, you could qualify for one or two credit cards.
  • For people with average credit scores If your credit score is average, you might have between two and three credit cards.
  • for those with high credit scores: If you have an excellent credit score you could be the owner of four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've examined the number of credit cards should you have, let's explore how applying multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit card accounts can positively impact your credit score, in a variety ways for example:

  • Increased credit utilization ratio Possessing multiple credit card accounts can aid in improving your CUR. It spreads the balances on multiple cards.
  • Diversified credit mix: A diversified credit mix can help improve your credit score.

Negative Impact of Owning Multiple Credit Cards on Credit Score

Owning multiple credit cards can cause damage to your credit score the following ways:

    • Increased risk of missing payments and delinquencies: having a large number of credit cards can lead to the risk of having to miss payments. Also, there is a chance of becoming delinquent with your account.
    • Increased credit inquiry and new accounts Affiliation to multiple credit cards can be the cause of multiple credit inquiry and new accounts. Both of them could affect your credit score.
    • Lower average age of accounts Multiple credit card accounts can lower the age average of your accounts. As a result, it can lower your credit score.
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