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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


A question that is often asked by people in the realm of personal finance is "How numerous credit cards should I own?" This question becomes even more pertinent when you are contemplating adding tradelines to your credit profile. Let's clear up this issue by providing you with the facts as well as a roadmap to help you make smart financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit-cards you carry isn't just an issue of personal preference. It also influences the credit score. Although you're aware of the fact that having credit cards can improve your credit score, you're likely not sure how many cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we look at how many credit cards you need to have before we look at the benefits and downsides of having several credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're using multiple credit cards the credit limit may be greater. A high credit limit is great for emergency expenses or large purchases.
  • Use credit card rewards as well as cashback to save on items on a regular basis.
  • Your ratio of credit utilization will improve. Your credit utilization ratio refers to the percentage of your available credit that you currently use. Making use of a variety of credit cards could increase your credit score through dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards could make it more likely be tempted to overspend or go into debt.
  • It's simple to make unplanned purchases that you aren't able to afford when you're carrying a number of credit cards.
  • The management of multiple credit cards could require long and time. More so if the payment timings differ.
  • More cards can result in an increase in credit utilization. A high CUR could affect your credit score.
  • Different cards provide different perks. Too many cards could mean being left out of many advantages.
  • On the other hand being a card holder with too many can make the task of calculating payment due dates a challenge. It could result in late fees and a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Different Benefits: Look for cards that provide a variety of advantages, such as travel rewards, cashback or low-interest rates.
  2. Annual Fees: It is important to make sure the card's benefits far exceed any annual costs.
  3. Interest Rates An APR that is low is crucial unless you're confident that you'll finish the balance each month.
  4. Credit Limit: A higher credit limit can boost your credit utilization ratio, so long as you don't overdraw it.

Average Number Credit Cards Should I Have

Now that we've looked at the pros and cons of having multiple credit card accounts, let's see how many credit card you should have. What is too much? And how many are enough?

Financial experts recommend having 3 to 5 credit card accounts to ensure a well-rounded credit history. This gives you many advantages and also improves the ratio of credit utilization.

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 the number of credit cards you can have. You'll only be able to qualify on one or two credit lines if have an unsatisfactory credit score or a credit history that is not as good.
  • Income and expenses: Your earnings and expenses will be crucial. If you earn a high income and low expenses, you may manage more credit cards than someone with a lower income and higher expenses.
  • Priorities and goals for your financial life: Your goals in terms of finances and priorities will also affect the number of credit card you need to own. If you want to improve your credit rating or earn rewards, you should consider owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • for those with no credit history: If your credit score is not great, you might be eligible for one or two credit cards.
  • For those with a credit score of average If your credit score is average you may have up to three credit cards.
  • for those with high credit scores: If you have an excellent credit score you may have four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've examined how many credit card you should have let's consider how having multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Possessing multiple credit cards may be beneficial to your credit score in various ways in which they include:

  • Improved credit utilization ratio Having multiple credit card accounts can aid in improving your CUR. It spreads your balances across 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 be detrimental to your credit score in the following ways:

    • Greater risk of not paying and delinquencies credit cards may result in an increased risk of avoiding payments. There is also the risk of becoming delinquent to your credit card accounts.
    • Increased credit inquiries and new accounts Credit card applications for multiple cards could generate multiple credit enquiries and new accounts. Both of them could affect your credit score.
    • Lower average account age A variety of credit cards can help reduce the average age of your accounts. As a result, it could lower your credit score.
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