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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 their personal finances is "How numerous credit cards should I own?" This question becomes more important when you are considering the addition of tradelines to your credit report. Let's take a look at this topic from a different angle giving you the insights 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 is not only something that you can do for personal convenience. It also influences the credit score. While you're aware that a credit card can improve your credit score, you're likely not sure how many cards you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we get into the details of how many credit cards you're required to own we'll first examine the benefits and downsides of owning multiple credit card.

Advantages of Owning Multiple Credit Cards

  • If you own multiple credit cards your credit limit could be higher. A high credit limit is helpful for emergency expenses or large purchases.
  • Make use of credit cards with rewards and cashback offers to save you money on items on a regular basis.
  • The ratio of your credit utilization will improve. Your credit utilization percentage refers to the amount of available credit that you are currently using. Credit cards that are used in multiple ways can improve your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can increase your chances to spend more than you can afford and then fall into debt.
  • It's easy to make unplanned purchases you can't afford when you have a lot of credit cards.
  • managing multiple credit cards may require considerable time and effort. It is even more difficult if the payment times are different.
  • A lot of cards can result in a high rate of utilization. A high CUR could affect your credit score.
  • Different cards provide different perks. If you have too many cards, you risk not gaining the many advantages.
  • On the other hand having too many cards can make the task of calculating payment due dates challenging. It could result in problems with late fees and a lower credit score.

Key Points to Consider When Applying for Credit Cards

  1. Different Benefits: Find cards that have benefits, including travel rewards, cashback or low-interest rates.
  2. Annual Fees: Make sure the card's benefits are greater than any annual costs.
  3. Interest Rates Lower APRs are vital unless that you'll be able to pay off the balance each month.
  4. Credit Limit: A higher credit limit can help improve your credit utilization ratio, provided you don't exceed it.

Average Number Credit Cards Should I Have

After looking at the pros and cons of having several credit cards, let's think about the number of credit cards should you have. How many credit cards are too much, and how many are sufficient?

Financial experts suggest having between 3 and five credit cards for an overall credit profile. This will provide many benefits and helps with the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

A number of factors must be taken into consideration when deciding on the number of credit cards to own. These factors include:

  • The credit score and the history: Your credit scores and histories will affect how many credit cards you can have. You're only eligible for one or two credit cards if have poor credit scores or a less than stellar credit history.
  • Spending and income: Your income and expenses will also be crucial. If you earn a great income and low expenses, you may be able to handle more credit card debt than those with lower incomes and higher expenses.
  • Priorities and goals for your financial life: Your financial goals and priorities will influence the number of credit-cards you should own. If you're looking to boost your credit score or earn rewards consider having a variety of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some recommended numbers of credit cards, based upon various scenarios:

  • for those with no credit history If your credit score is not great, you might qualify for one or two credit cards.
  • For those having 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 excellent credit scores, you may own at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

After we've discussed how many credit cards should you have Let's look at how using multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit card accounts can positively impact your credit score in several ways and include:

  • Increased credit utilization ratio: The fact that you have multiple credit cards can help improve your CUR. It spreads your balances over 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

Having multiple credit card accounts can affect your credit score in the following ways

    • Higher risk of late payments and delinquencies: Having many credit cards can increase a higher risk of missing payments. There is also the risk of being in delinquency to your credit card accounts.
    • Increased credit inquiries, as well as the creation of new accounts The application process for multiple credit cards could lead to multiple credit inquiries and new accounts. Both of these could lower your credit score.
    • Lower average age of your account Multiple credit cards can help lower the average age of your accounts. In turn, it can lower your credit score.
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