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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 enigmatizing questions for people in the field of personal finance is "How many credit cards do I need?" This question becomes much more relevant when you are contemplating adding tradelines to your credit score. Let's dispel this nagging issue and provide you with the understanding and guidelines to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of cards you hold is not only one of your personal choices for convenience. It also affects your credit score. While you're aware that a credit card can benefit 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 get into the details of how many credit cards you're allowed to have We'll first discuss the benefits and downsides that come with having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you've got several credit cards your credit limit could be greater. A high credit limit is ideal for emergencies or large purchases.
  • Use credit card rewards or cashback rewards to save some money on items on a regular basis.
  • The ratio of your credit utilization will rise. Your credit utilization ratio is related to the amount of available credit that you currently use. The use of multiple credit cards can improve your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more prone to overspend and fall into debt.
  • It's not difficult to make unexpected purchases that you're not able to pay for when you're juggling multiple credit cards.
  • The management of multiple credit cards could take some time and energy. Particularly if your payment dates are different.
  • More cards can lead to high levels of credit utilization. A high CUR can hurt your credit score.
  • Different cards offer different perks. Having too few cards means missing out on diverse benefits.
  • On the other hand being a card holder with too many can make the task of calculating payment due dates challenging. It can result to the occurrence of late fees and damage to your credit score.

Key Points to Consider When Applying for Credit Cards

  1. Different 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 annual fees.
  3. Interest Rates Low APRs are vital unless that you'll be able to pay off the balance each month.
  4. Credit Limit: A higher credit limit can benefit your credit utilization ratio if you don't max it out.

Average Number Credit Cards Should I Have

After looking at the advantages and disadvantages of owning multiple credit card accounts, let's take a look at the number of credit cards you should be carrying. How many credit cards is enough? And how many are enough?

Financial experts suggest having 3 to five credit cards to ensure an overall credit profile. This will provide many advantages and also improves the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

A variety of factors should be considered when deciding how many credit cards you have. These include:

  • Credit score and past history: Your credit score and history will determine the number of credit cards you can have. You're only eligible on one or two credit lines if have low credit scores or a less than stellar credit history.
  • Costs and income: Your earnings and expenses will be important. If you have a substantial income and low expenses, you can 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 can affect the number of credit card you should have. If you're looking for ways to improve your credit rating or earn rewards, think about having a variety of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some recommended numbers of credit card numbers based on different scenarios:

  • For those with no credit history If you do not have credit history, then you might be eligible for one or two credit cards.
  • For those with a credit score of average If your credit score is average, then you could be able to have three or more credit cards.
  • For those with outstanding credit scores: If you have excellent credit scores you could be the owner of four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have looked at 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

The fact that you have multiple credit cards can positively impact your credit score in several ways and include:

  • Improved credit utilization ratio: Owning multiple credit cards can 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 damage your credit score the following ways

    • Higher risk of late payments and delinquencies: having a large number of credit cards can result in greater risk of missing payments. There is also a chance of becoming delinquent on your accounts.
    • New credit inquiries and increased credit accounts When you apply for multiple credit cards can result in multiple credit queries as well as new accounts. Both of them could affect your credit score.
    • Lower average age of your account Multiple credit card accounts can lower the average age of your accounts. In turn, it can affect your credit score.
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