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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 enigmatizing questions for people with regards to personal finance is "How numerous credit cards should I own?" This question becomes even more relevant when you are contemplating adding trade lines to your credit profile. Let's simplify this subject to provide you with the necessary information and guidelines to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit card you use isn't just something that you can do for personal convenience. It also influences the credit score. Although you're aware that having credit cards can improve your credit score, you're likely not sure how many cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we get into the details of the number of credit cards you need to have let's look at the advantages and disadvantages that come with having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you've got several credit cards the credit limit may be higher. A higher credit limit can be great for emergency expenses or large purchases.
  • Make use of credit cards with rewards or cashback rewards to save some money when you buy things on a daily basis.
  • The ratio of your credit utilization will increase. Your credit utilization ratio refers to the percentage of your credit available that you currently use. Credit cards with multiple accounts can boost your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more likely to spend too much and end up in debt.
  • It's easy for people to make unplanned purchases you can't afford when you're carrying a number of credit cards.
  • Making multiple payments with credit cards can take more time and effort. Even more so if payment schedules are different.
  • In addition, more cards could result in the utilization of credit to be high. A high CUR can impact your credit score.
  • Different cards have different benefits. Insufficient cards mean you aren't getting the full advantages.
  • On the flip side having too many accounts can make keeping track of due dates challenging. It can lead to the occurrence of late fees and damage to your credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diversity of Benefits Find cards that offer benefits, including travel rewards, cashback or low-interest rates.
  2. Annual Fees: Be sure that the card's benefits surpass annual fees.
  3. Interest Rates A lower APR is vital unless you'll pay off the balance each month.
  4. Credit Limit: A higher credit limit can improve your credit utilization ratio if you don't use it to the max.

Average Number Credit Cards Should I Have

After looking at the advantages and disadvantages to owning multiple credit cards, let's consider how many credit cards you ought to have. What is too many, and how many are enough?

Financial experts recommend having between 3 and 5 credit cards to have a well-rounded credit history. This provides a range of benefits and helps improve 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 on the number of credit cards one should have. These include:

  • Credit score and history: Your credit score and history will determine how many credit cards to have. You could only qualify for a couple of credit cards, if have poor credit scores or a low credit history.
  • In addition to your expenses, your income and expenses will also be crucial. If you're blessed with a higher income and low expenses, you could take on more credit cards than those with lower incomes and higher expenses.
  • Financial goals and priorities: Your goals in terms of finances and priorities can affect how many credit cards you should have. If you're looking to boost your credit score or earn rewards, think about having several credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For people who do not have credit history: If you don't have a credit history, you may qualify for one or two credit cards.
  • For those who have average credit scores If your credit score is average you may possess two to three credit cards.
  • For people with excellent credit scores: If you have an excellent credit score you may be able to hold four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have discussed how many credit cards to get Let's see how applying multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

The fact that you have multiple credit cards can affect your credit score in several ways, including:

  • A higher credit utilization ratio Having multiple credit card accounts can help improve your CUR. The spreads 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

Multiple credit cards may impact your credit score the following ways:

    • Risk of missed payments and delinquencies: having a large number of credit cards can create the risk of having to miss payments. There is also a chance of being in delinquency to your credit card accounts.
    • Increased credit inquiries and new accounts: Applying for multiple credit cards can result in multiple credit queries as well as new accounts. Both can negatively impact your credit score.
    • Lower average account age The fact that you have multiple credit cards can help lower the average age of your accounts. This could lower your credit score.
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