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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


One of the most frequently asked questions when it comes to personal finance is "How many credit cards should I have?" This question becomes even more pertinent when you are considering the addition of trade lines to your credit profile. Let's decode this issue and provide you with the understanding and a plan to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit or debit cards you use isn't just an issue of personal choice. It also influences your credit score. Although you're aware that having an account with a credit card will improve your credit score, you're probably perplexed about how many you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we look at the number of credit cards you should have First, let's take a look at the benefits and downsides of owning multiple credit card.

Advantages of Owning Multiple Credit Cards

  • If you own multiple credit cards the credit limit may be higher. A higher credit limit is useful for emergencies or large purchases.
  • Utilize credit cards with rewards and cashback offers to save you money when you purchase things on a daily basis.
  • The ratio of your credit utilization will rise. Your credit utilization rate refers to the percentage of your credit available that you currently use. The use of multiple credit cards can increase your credit score through dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can increase your chances to overspend and enter debt.
  • It's easy to make impulsive purchases you can't afford when you have several credit cards.
  • managing multiple credit cards may take considerable time and effort. Particularly if your payment times are different.
  • More cards could lead to excessive credit utilization. A high CUR could harm your credit score.
  • Different cards come with different perks. Insufficient cards mean missing out on diverse advantages.
  • On the flip side having too many accounts can make keeping track of payments due dates challenging. This can result in high interest and a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diversity of Benefits Look for cards that offer advantages, such as travel rewards, cashback, or low-interest rates.
  2. Annual Fees Be sure that the card's advantages outweigh any annual costs.
  3. Interest Rates Lower APRs are essential unless you'll pay off the balance every month.
  4. Credit Limit: A higher credit limit can benefit your credit utilization ratio, provided that you don't go over it.

Average Number Credit Cards Should I Have

After looking at the advantages and disadvantages to owning several credit cards, let's think about how many credit cards should you have. What is enough? How many are enough?

Financial experts suggest having between 3 and 5 credit card accounts to ensure an overall credit profile. This can offer a variety advantages and also improves the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

There are many factors to take into consideration when deciding how many credit card accounts to own. These factors include:

  • History and credit score: Your credit history and score will dictate the number of credit cards to have. You may only qualify for one or two credit cards if you have poor credit scores or have a poor credit record.
  • Budget and income: Your income and expenses will also be vital. If you have an excellent income and low expenses, you can be able to handle more credit card debt than someone with a lower income and more expenses.
  • Priorities and goals for your financial life: Your financial objectives and priorities will also determine the number of credit cards you should possess. If you're looking for ways to improve your credit score and earn rewards, you should consider owning a number of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some recommended numbers of credit cards based on various scenarios:

  • For people with no credit history: If you are not able to establish credit, you could qualify for one or two credit cards.
  • For people having average credit scores If your credit score is average, it is possible to possess two to three credit cards.
  • For people with excellent credit scores: If you have excellent credit scores you can have four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've examined the number of credit card you should have Let's see how applying multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Possessing multiple credit cards may have a positive effect on your credit score in a variety of ways which include:

  • Increased credit utilization ratio: Having multiple credit cards could help improve your CUR. It spreads out your balances among 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

Having multiple credit card accounts can cause damage to your credit score these ways:

    • Risk of missed payments and delinquencies: having a large number of credit cards may result in an increased risk of avoiding payments. There's also a chance of becoming delinquent on your accounts.
    • New credit inquiries and increased credit accounts When you apply for multiple credit cards could cause multiple credit inquiries and new accounts. Both can impact your credit score.
    • Lower average age of accounts The fact that you have multiple credit cards can lower the average age of your accounts. In turn, it could lower your credit score.
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