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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 the field of personal finance is "How many credit cards do I need?" This question becomes more pertinent when you are considering the addition of tradelines to your credit score. Let's decode this issue and provide you with the understanding and roadmap to make confident financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit cards you carry is not only the result of personal convenience. It also influences your credit score. While you're aware that credit cards can help your credit score, you're likely confused as to how many credit cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we discuss the number of credit cards you should have before we look at the benefits and downsides of owning multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you own multiple credit cards your credit limit could be higher. A high credit limit is useful for emergencies or large purchases.
  • Use credit card rewards and cashback offers to save you money on things on a daily basis.
  • Your credit utilization ratio will increase. Your credit utilization number refers to the percentage of your credit available that you are currently using. Credit cards that are used in multiple ways can boost your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more prone be tempted to overspend or go into debt.
  • It's easy, and often unplanned, to make purchases that aren't financially feasible when you have several credit cards.
  • Controlling multiple credit cards can take considerable time and effort. It is even more difficult if the payment times are different.
  • More credit cards can lead to a high rate of utilization. A high CUR can negatively impact your credit score.
  • Different cards have different benefits. With too few cards, you risk missing out on diverse benefits.
  • On the flip side the other hand, having a lot of cards can make keeping track of 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. Differential Benefits: Find cards that offer benefits, including travel rewards, cashback, or low-interest rates.
  2. Annual Fees Make sure the card's benefits are greater than annual fees.
  3. Interest Rates: A lower APR is crucial unless you're confident that you'll pay the balance each month.
  4. Credit Limit: A higher credit limit could boost your credit utilization rate, if you don't overdraw it.

Average Number Credit Cards Should I Have

After having looked at the pros and cons of having multiple credit card accounts, let's see the number of credit cards should you have. What is enough? How many are enough?

Financial experts recommend having 3 to 5 credit cards for an overall credit profile. This provides a range of benefits and helps improve the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

Several factors must be considered when deciding on the number of credit cards to own. These include:

  • History and credit score The credit score you have and your history will decide the number of credit cards you are eligible for. You are only eligible to get one or two credit cards in the event that you have a low credit score or a low credit history.
  • In addition to your expenses, your expenses and income will also be important. If you have a good income and lower expenses, you will be able to have more credit cards than those with lower incomes and more expenses.
  • Priorities and financial goals: Your goals in terms of finances and priorities will affect the number and type of credit cards you should have. If you're hoping 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 suggested numbers of credit cards that are based off of different scenarios:

  • For those who have no credit history If you are not able to establish credit, you might qualify for one or two credit cards.
  • For people with credit scores that are average: If you're averaging credit score, you may have two to three credit cards.
  • for those with high credit scores: If you have an excellent credit score you can have at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

After we've examined the number of credit card you should have, let's explore how applying multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Possessing multiple credit cards may improve your credit score, in a variety ways including:

  • Improved 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

Owning multiple credit cards can hurt your credit score in the following ways:

    • Higher risk of missed payments and delinquencies: Having many credit card accounts can mean an increased risk of not making payments. Also, there is a chance of becoming indebted to your credit card accounts.
    • Increased credit inquiries, as well as the creation of new accounts Application for multiple credit cards could be the cause of multiple credit inquiry as well as new accounts. Both can impact your credit score.
    • Lower average age of your account The presence of multiple credit card accounts can help lower the average age of your accounts. In turn, it could affect your credit score.
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