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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 question that boggles people in the realm of personal finance is "How numerous credit cards should I own?" This question becomes much more relevant when you are considering the addition of trade lines to your credit profile. Let's take a look at this topic from a different angle by providing you with the information and direction to make sound financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit and debit cards you have is not just something that you can do for personal convenience. It also affects your credit score. While you're aware that a credit card can improve your credit score, you're likely confused as to how many credit cards you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we go into the number of credit cards you should own, let's first look at the advantages and disadvantages of owning multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're using multiple credit cards, your credit limit can be greater. A higher credit limit is great for emergency expenses or large purchases.
  • Use credit cards that reward you and cashback offers to save you money when you buy items on a regular basis.
  • Your credit utilization ratio will rise. Your credit utilization ratio is a reference to the percentage of your available credit that you are currently using. Credit cards that are used in multiple ways can increase your credit score through splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can increase your chances to overspend and go into debt.
  • It's simple to make unplanned purchase that you cannot afford if you have many credit cards.
  • It can be difficult to manage multiple credit card accounts. It will require much time and effort. This is especially true if payment schedules vary.
  • More cards can result in excessive credit utilization. A high CUR could harm your credit score.
  • Different cards offer different perks. Insufficient cards mean missing out on many advantages.
  • On the flip side, having too many cards can make the task of calculating payment due dates a challenge. It could result in problems with late fees and a lower credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits Look for cards that have various advantages, such as cashback, travel rewards, or low-interest rates.
  2. Annual Fees Check to ensure that the card's benefits outweigh the annual fee.
  3. Interest Rates Low APRs are crucial unless you're confident that you'll be able to pay off the balance each month.
  4. Credit Limit: A higher credit limit can benefit your credit utilization ratio, so long as you don't exceed the limit.

Average Number Credit Cards Should I Have

After looking at the pros and cons of having multiple credit cards, let's consider how many credit cards you should own. How many credit cards are too much, and how many are sufficient?

Financial experts recommend having between 3 and five credit cards to create a balanced credit profile. This offers a variety of benefits and can help improve the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

A variety of factors should be considered when deciding how many credit cards to own. These factors include:

  • The credit score and the history The credit score you have and your history will decide the number of credit cards to have. You are only eligible to get one or two credit cards in the event that have a low credit score or a weak credit history.
  • Budget and income: Your income and expenses can be vital. If you have a substantial income and minimal expenses, you might manage more credit card payments than someone with a lower income and higher expenses.
  • Financial goals and priorities Priorities and financial goals can influence the number of credit cards you should possess. If you're looking for ways to improve your credit rating, or earn rewards points, think about owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • for those with no credit history If you do not have credit history, then you could be eligible for one or two credit cards.
  • For those with average credit scores: If you have an average credit score, you might possess two to three credit cards.
  • For people with excellent credit scores: If you have excellent credit you may have at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've examined the number of credit cards you're required to have Let's see how applying multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards positively impact your credit score by a variety ways which include:

  • Better credit utilization ratio: The fact that you have multiple credit cards can assist 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

Multiple credit card accounts can affect your credit score in the following ways:

    • Greater risk of missing payments and delinquencies: having a large number of credit cards may result in an increased risk of not making payments. There is also the possibility of being in delinquency with your account.
    • New credit inquiries and increased credit accounts The application process for multiple credit cards can lead to multiple credit inquiries and new accounts. Both can lower your credit score.
    • A lower average age for your account Multiple credit card accounts can help lower the average age of your accounts. This can lower your credit score.
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