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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 questions that stumps people in personal finance is "How many credit accounts should I hold?" This question becomes even more relevant when you are considering the addition of tradelines to your credit profile. Let's clarify this issue and provide you with the knowledge and guidance to make shrewd financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit cards you carry is not only something that you can do for personal convenience. It also influences the credit score. Although you're aware that having a credit card can improve your credit score, you're probably puzzled as to how many you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we look at the number of credit card you should own before we look at the advantages and disadvantages when you have multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you've got several credit cards your credit limit will be higher. A high credit limit is beneficial for emergency expenses or large purchases.
  • Make use of credit cards with rewards or cashback rewards to save some money when you buy things daily.
  • Your ratio of credit utilization will improve. Your credit utilization rate refers to the percentage of your available credit that you are currently using. Utilizing multiple credit cards can increase your credit score through dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more likely to spend too much and end up in debt.
  • It's easy, and often unplanned, to make purchases that aren't affordable when you're using a variety of credit cards.
  • The management of multiple credit cards can require an amount of time and effort. This is especially true if payment dates are different.
  • In addition, more cards could result in an increase in credit utilization. A high CUR can hurt your credit score.
  • Different cards come with different perks. If you have too many cards, you risk missing out on many advantages.
  • On the flip side being a card holder with too many can make keeping track of due dates a challenge. It can result in late fees and a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diversity of Benefits Find cards that have various perks, such as travel rewards, cashback or low-interest rates.
  2. Annual Fees: Be sure that the card's benefits surpass the annual fee.
  3. Interest Rates: An APR that is low is essential unless you're certain that you'll repay the balance each month.
  4. Credit Limit: A higher credit limit can help your credit utilization ratio, if that you don't max it out.

Average Number Credit Cards Should I Have

Now that we've looked at the pros and cons of using multiple credit cards, let's consider how many credit cards you should be carrying. How many credit cards is enough? How many are sufficient?

Financial experts recommend having between 3 and five credit cards to ensure an rounded credit profile. This gives you many benefits and can also help with the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

Many factors need to be considered when deciding on the number of credit card accounts to own. These factors include:

  • Credit score and history: Your credit score and history will determine how many credit card you should have. You can only be eligible only for one or two credit accounts if you have low credit scores or a less than stellar credit history.
  • Spending and income: Your earnings and expenses will be vital. If you earn a high income and relatively low expenses, then you can be able to handle more credit card debt than those with lower incomes and more expenses.
  • Priorities and financial goals: Your financial goals and priorities can affect the number and type of credit cards you need to own. If you're trying to improve your credit score or earn rewards consider owning a number 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 people who do not have credit history: If you are not able to establish credit, you might qualify for one or two credit cards.
  • For people who have average credit scores If you're averaging credit score, you could have up to three credit cards.
  • for those with high credit scores: If you have excellent credit scores you may be able to hold four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have examined how many credit cards you're supposed to have Let's take a look at how applying multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards affect your credit score, in a variety ways in which they include:

  • Better credit utilization ratio: Having multiple credit card accounts can assist in improving 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

Multiple credit cards could negatively impact your credit score the following ways

    • Higher risk of missing payments and delinquencies: Having many credit cards can lead to an increased risk of avoiding payments. There is also a risk of becoming delinquent on your accounts.
    • Increased credit inquiries, as well as the creation of new accounts Inquiring for multiple credit cards can produce multiple credit requests and new accounts. Both of these can affect your credit score.
    • A lower average age for your account Multiple credit card accounts can help reduce the age average of your accounts. In turn, it can lower your credit score.
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