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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 issues that confuse people with regards to personal finance is "How many credit cards should I have?" This question becomes more important when you are thinking about adding tradelines to your credit report. Let's simplify this subject to provide you with the necessary 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 isn't just one of your personal choices for convenience. It also influences the credit score. While you know that having a credit line can help your credit score, you're likely uncertain about the amount you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we dive into the number of credit cards to get we'll first take a look at the advantages and disadvantages when you have multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you own multiple credit cards your credit limit might be higher. A higher credit limit can be advantageous for emergencies or large purchases.
  • Use credit card rewards and cashback programs to save money when you purchase things daily.
  • Your ratio of credit utilization will increase. The credit utilization ratio refers to the percentage of your available credit that you are currently using. Credit cards with multiple accounts can boost your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards are a great way to increase the likelihood to overspend and enter debt.
  • It's simple to make unplanned purchases that aren't financially feasible when you're juggling multiple credit cards.
  • It can be difficult to manage multiple credit card accounts. It will take an amount of time and effort. Particularly if the payment dates are different.
  • More cards can lead to an increase in credit utilization. A high CUR could harm your credit score.
  • Different cards come with different perks. The lack of cards means not gaining the many advantages.
  • On the other hand having too many cards can make keeping track of payment due dates challenging. It could lead to charges for late payments as well as a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Variety of Benefits: Find cards that offer various perks, such as travel rewards, cashback, or low-interest rates.
  2. Annual Fees: Be sure that the card's advantages outweigh the annual fee.
  3. Interest Rates A low APR is essential unless that you'll be able to pay off the balance every month.
  4. Credit Limit: A higher credit limit can 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 advantages and disadvantages of owning several credit cards, let's think about how many credit cards should you have. How many credit cards are enough? And how many are sufficient?

Financial experts recommend having between 3 and 5 credit card accounts to ensure a comprehensive credit profile. This provides a range of benefits and helps improve the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

Numerous factors should be taken into account when deciding on the number of credit cards to have. These factors include:

  • History and credit score: Your credit score, history and scores will determine how many credit cards to have. You may only qualify to get one or two credit cards in the event that you have low credit scores or a poor credit history.
  • Earnings and expenses: Your earnings and expenses will be crucial. If you've got a high income and low expenses, you may take on more credit cards than those with lower incomes and more expenses.
  • Priorities and goals for your financial life The goals you have for your finances and the priorities will also affect how many credit cards you should possess. If you're trying to improve your credit score and earn rewards, 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 people with no credit history If there is no credit history for you, you could be eligible for one or two credit cards.
  • For people with average credit scores If you're averaging credit score, you may possess two to three credit cards.
  • For people with outstanding 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

After we've discussed how many credit card you should have let's consider how having multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit card accounts can improve your credit score, in a variety ways including:

  • A higher credit utilization ratio Having multiple credit cards could help improve your CUR. It 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

Owning multiple credit cards can damage your credit score the following ways

    • Increased risk of missing payments and delinquencies: having a large number of credit cards can result in an increased risk of avoiding payments. There is also a possibility of becoming delinquent on your accounts.
    • New and increased credit inquiries as well as new accounts If you apply for several credit cards can lead to multiple credit inquiries and new accounts. Both can negatively impact your credit score.
    • Lower average account age The fact that you have multiple credit cards can lower the age average of your accounts. As a result, it could affect your credit score.
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