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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 can I use?" This question becomes particularly pertinent if you are contemplating adding tradelines to your credit score. Let's break down this subject giving you the knowledge and guidance to make shrewd financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit or debit cards you use isn't just the result of personal convenience. It also affects your credit score. While you know that having credit cards can boost your credit score, you're likely puzzled as to how many you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we get into the details of how many credit cards you should have Let's first consider the benefits and downsides of having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you own multiple credit cards, your credit limit can be greater. A higher credit limit can be ideal for emergencies or large purchases.
  • Use credit cards with rewards and cashback offers to save you money on things on a daily basis.
  • Your credit utilization ratio will increase. The credit utilization ratio refers to the amount of credit available that you currently use. Utilizing multiple credit cards may boost your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more likely to overspend and fall into debt.
  • It's easy and convenient to make purchases that you're not able to pay for when you're juggling multiple credit cards.
  • The management of multiple credit cards can require the time and effort. This is especially true if payment schedules differ.
  • More credit cards can lead to very high utilization of credit. A high CUR could harm your credit score.
  • Different cards offer different perks. Having too few cards means you aren't getting the full benefits.
  • On the flip side, having too many cards can make the process of keeping track of due dates challenging. This can result in overdue fees and damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits Look for cards that provide various benefits, including 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: An APR that is low is vital unless that you'll have enough money to pay off the balance each month.
  4. Credit Limit: A higher credit limit could improve your credit utilization ratio, if you don't overdraw it.

Average Number Credit Cards Should I Have

Now that we've looked at the advantages and disadvantages of owning multiple credit card accounts, let's take a look at how many credit cards you need to have. How many credit cards is too much, and how many are sufficient?

Financial experts recommend having 3 to five credit cards for a comprehensive credit profile. This can provide a variety of advantages and also improves the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

There are a variety of factors to consider when deciding on the number of credit cards to have. These include:

  • Credit score and past history Your credit score and past history determine how many credit card you should have. You are only eligible on one or two credit lines if you have an unsatisfactory credit score or a short credit history.
  • The amount of your income and expenses will also be important. If you earn a great income and minimal expenses, you might handle more credit cards than those with lower incomes and more expenses.
  • Priorities and financial goals: The goals you have for your finances and the priorities also affect the number of credit card you need to own. If you want to improve your credit score or 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 that are based off of different scenarios:

  • For those with no credit history If you're without credit, may qualify for one or two credit cards.
  • For people who have average credit scores If your credit score is average you may possess two to three credit cards.
  • for those with high credit scores: If you have excellent credit scores you may have four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've looked at how many credit cards you're supposed to have Let's see how applying multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Owning multiple credit cards can have a positive effect on your credit score, in a variety ways in which they include:

  • Improved credit utilization ratio: The use of multiple credit cards may help improve 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

Possessing multiple credit cards can cause damage to your credit score these ways:

    • Increased risk of missing payments and delinquencies: having a large number of credit card accounts can mean a greater chance of missing payments. There is also a possibility of becoming indebted to your credit card accounts.
    • Increased credit inquiry and new accounts Application for multiple credit cards can generate multiple credit enquiries and new accounts. Both can negatively impact your credit score.
    • Lower average age of your account The presence of multiple credit card accounts can help lower the age average of your accounts. In turn, it can lower your credit score.
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