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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 in personal finance is "How many credit cards should I have?" This question becomes much more relevant when you are considering the addition of tradelines to your credit report. Let's break down this subject by providing you with the facts and direction to make sound financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit cards you have is not just an issue of personal convenience. It also influences the credit score. Although you're aware of the fact that having a credit line can help your credit score, you're probably confused as to how many credit cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we begin to discuss how many credit cards you're required to own We'll first discuss the advantages and disadvantages of having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're a credit card holder with multiple cards and credit limits, they could be greater. A high credit limit is ideal for emergencies and large purchases.
  • Utilize credit cards with rewards or cashback rewards to save some money on items on a regular basis.
  • Your credit utilization ratio will rise. Your credit utilization percentage refers to the percentage of your credit available that you currently use. Making use of a variety of credit cards could improve your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make it more likely to overspend and fall into debt.
  • It's not difficult to make unexpected purchases that aren't financially feasible when you're using a variety of credit cards.
  • Managing multiple credit cards can take more time and effort. This is especially true if payment dates are different.
  • The addition of more cards can result in excessive credit utilization. A high CUR could hurt your credit score.
  • Different cards come with different perks. A lack of cards can mean losing out on a variety of benefits.
  • On the other hand being a card holder with too many can make keeping track on payment due dates a challenge. It can result to unpaid fees and a degraded credit score.

Key Points to Consider When Applying for Credit Cards

  1. Different Benefits: Look for cards that come with benefits, including travel rewards, cashback, or low-interest rates.
  2. Annual Fees Be sure that the card's benefits are greater than any annual charges.
  3. Interest Rates A lower APR is essential unless you're certain you'll pay off the debt each month.
  4. Credit Limit: A higher credit limit can boost your credit utilization ratio, provided that you don't go over it.

Average Number Credit Cards Should I Have

After having looked at the advantages and disadvantages of owning multiple credit card accounts, let's take a look at how many credit cards to get. What is too much? And how many are sufficient?

Financial experts recommend having 3 to five credit cards for a comprehensive credit profile. This gives you many advantages and boosts the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

Several factors must be considered when deciding how many credit cards to hold. These include:

  • Credit score and history: Your credit score and past history determine how many credit cards you should own. You're only eligible for one or two credit cards if have an unsatisfactory credit score or a less than stellar credit history.
  • Spending and income: Your income and expenses can be vital. If you earn a great income and relatively low expenses, then you can manage more credit card payments than someone with a lower income and more expenses.
  • Priorities and goals for your financial life Your goals in terms of finances and priorities also determine the number of credit cards you need to own. If you're looking to improve your credit rating, or earn rewards points, you should consider having a variety of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For people with no credit history: If you are not able to establish credit, you could be eligible for one or two credit cards.
  • For people with a good credit score: If your credit score is average, you may have a couple of credit cards.
  • For those with excellent credit scores: If you have excellent credit scores you could have four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have examined how many credit cards you should have, let's explore how applying multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit card accounts can affect your credit score in a variety of ways which include:

  • Better credit utilization ratio: Owning multiple credit cards can aid in improving 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 could hurt your credit score in the following ways

    • Greater risk of missing payments and delinquencies: Having many credit card accounts can mean a greater chance of missing payments. There is also a chance of being in delinquency on your accounts.
    • New credit inquiries and increased credit accounts Credit card applications for multiple cards could result in multiple credit inquiries and new accounts. Both of them could affect your credit score.
    • Lower average age of accounts The presence of multiple credit card accounts can help reduce the age average of your accounts. This could affect your credit score.
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