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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 when it comes to personal finance is "How many credit cards can I use?" This question becomes crucial when you are considering the addition of tradelines to your credit report. Let's clarify this issue to provide you with the necessary information 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 is not just a matter of personal convenience. It also affects the credit score. Although you're aware that having credit cards can help your credit score, you're likely confused as to how many credit cards you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we go into how many credit cards to get let's look at the advantages and disadvantages of owning multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you own multiple credit cards your credit limit will be greater. A higher credit limit is handy for emergencies or large purchases.
  • Use credit card rewards and cashback program to cut costs on things on a daily basis.
  • Your ratio of credit utilization is likely to increase. Your credit utilization ratio is related to the amount of credit available that you are currently using. 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 eventually fall into debt.
  • It's simple to make unplanned expenditures that aren't feasible if you're juggling multiple credit cards.
  • Making multiple payments with credit cards can take more time and effort. More so if the payment schedules are different.
  • A lot of cards can result in excessive credit utilization. A high CUR can negatively impact your credit score.
  • Different cards offer different perks. Being too cautious with your cards can result in not gaining the many benefits.
  • On the flip side having too many accounts can make keeping track of due dates difficult. It can lead to overdue fees and damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diversity of Benefits: Look for cards that provide a variety of perks, such as travel rewards, cashback, or low-interest rates.
  2. Annual Fees Make sure the card's benefits are greater than any annual charges.
  3. Interest Rates Low APRs are important unless you're confident that you'll be able to pay off the balance every month.
  4. Credit Limit: A higher credit limit can boost your credit utilization ratio, so long as you don't exceed it.

Average Number Credit Cards Should I Have

After looking at the advantages and disadvantages to owning multiple credit cards let's explore how many credit card you should have. How many credit cards is enough? And how many are sufficient?

Financial experts recommend having between 3 and five credit cards in order to build a complete credit profile. This provides a range of benefits and helps with the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

A variety of factors should be considered when deciding on the number of credit cards to keep. These factors include:

  • Credit score and history: Your credit score and record will help determine the number of credit cards to have. You're only eligible for credit cards with one or two points if you have low credit scores or a low credit history.
  • The amount you earn and the expenses you incur: Your income and expenses can be important. If you earn a great income and lower expenses, you will be able to have more credit cards than someone with a lower income and more expenses.
  • Priorities and financial goals: Your goals in terms of finances and priorities will influence the number of credit cards you should have. If you are looking to improve 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 suggested numbers of credit card numbers based on different scenarios:

  • For those with no credit history If you're not creditworthy, you could qualify for one or two credit cards.
  • For those with credit scores that are average: If your credit score is average, it is possible to have a couple of credit cards.
  • For those with outstanding credit scores: If you have excellent credit you could be the owner of four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

After we've examined how many credit cards you're required to have we can look into how using multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards could affect your credit score in different ways in which they include:

  • Better credit utilization ratio: Having multiple credit cards could assist in improving your CUR. It spreads out 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

Multiple credit cards may harm your credit score in these ways:

    • Greater risk of not paying and delinquencies: Owning a lot of credit cards can result in an increased risk of not making payments. There is also a possibility of becoming delinquent with your account.
    • Increased credit inquiries and the opening of new accounts Credit card applications for multiple cards could result in multiple credit queries and new accounts. Both of them could affect your credit score.
    • A lower average age for your account Multiple credit card accounts can help reduce the age average of your accounts. This could lower your credit score.
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