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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 when it comes to personal finance is "How many credit cards can I use?" This question becomes crucial when you are considering the addition of trade lines to your credit profile. Let's clarify this issue by providing you with the information and a plan to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

Your number of credit cards is not only an issue of personal convenience. It also influences your credit score. Although you're aware that having a credit card can benefit your credit score, you're likely in a state of confusion about how many cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we get into how many credit card you should own Let's first consider the benefits and downsides of owning a variety of credit cards.

Advantages of Owning Multiple Credit Cards

  • If you've got several credit cards the credit limit may be greater. A credit limit that is high is ideal for emergencies and large purchases.
  • Utilize credit cards with rewards or cashback rewards to save some money when you buy things on a daily basis.
  • Your ratio of credit utilization will increase. Your credit utilization ratio refers to the amount of credit available that you are currently using. Utilizing multiple credit cards can increase your credit score through splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards could make it more likely to overspend and get into debt.
  • It's easy to make impulsive purchases that aren't affordable when you're using a variety of credit cards.
  • The management of multiple credit cards can take an amount of time and effort. More so if the payment schedules are different.
  • In addition, more cards could result in high credit utilization. A high CUR could hurt your credit score.
  • Different cards provide different perks. Too many cards could mean not gaining the many advantages.
  • On the other hand having too many cards can make keeping track on payment due dates a challenge. It can 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 come with benefits, including cashback, travel rewards, or low-interest rates.
  2. Annual Fees: Make sure the card's advantages outweigh any annual charges.
  3. Interest Rates: A lower APR is essential unless you're certain you'll pay off the balance each month.
  4. Credit Limit: A higher credit limit can help your credit utilization ratio, if that you don't go over it.

Average Number Credit Cards Should I Have

After having looked at the pros and cons of owning multiple credit card accounts, let's see how many credit cards you ought to have. How many credit cards are too much? And how many are enough?

Financial experts recommend having between 3 and 5 credit card accounts to ensure an rounded credit profile. This offers a variety of advantages and boosts the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

Several factors must be considered when deciding on the number of credit cards to own. These factors include:

  • History and credit score: Your credit history and score will dictate the number of credit cards you'll need. You are only eligible for a couple of credit cards, if you have low credit scores or a less than stellar credit history.
  • The amount of your income and expenses will also be vital. If you've got a high income and low expenses, you can use more credit cards than those with lower incomes and more expenses.
  • Financial goals and priorities: Your goals in terms of finances and priorities can determine how many credit cards you should own. If you're looking at improving your credit rating, or earn rewards points, consider owning a number of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For people who do not have credit history If you have no credit history, you might be eligible for one or two credit cards.
  • For those having average credit scores If your credit score is average you may have a range of two to three credit cards.
  • For those with excellent credit scores: If you have excellent credit, you may hold four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've examined how many credit cards you should have Let's see how applying multiple credit cards affects 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 various ways and include:

  • A higher credit utilization ratio Having multiple credit cards could assist in improving your CUR. The 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 negatively impact your credit score these ways:

    • Greater risk of not paying and delinquencies: having a large number of credit card accounts could lead to a greater chance of missing payments. There is also the possibility of becoming indebted on your accounts.
    • Increased credit inquiry and new accounts If you apply for several credit cards could create multiple credit inquires and new accounts. Both can lower your credit score.
    • Lower average age of accounts Possessing multiple credit cards can reduce the age average of your accounts. In turn, it could affect your credit score.
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