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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 issues that confuse people with regards to personal finance is "How many credit cards should I have?" This question becomes crucial when you are considering the addition of tradelines to your credit profile. Let's demystify this topic and provide you with the understanding and a plan to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit-cards you carry is not only a matter of personal convenience. It also affects your credit score. Although you're aware of the fact that having credit cards can help your credit score, you're likely in a state of confusion about how many cards you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we discuss the number of credit cards you need to have Let's first consider the advantages and disadvantages of owning multiple credit card.

Advantages of Owning Multiple Credit Cards

  • If you're a credit card holder with multiple cards your credit limit will be higher. A credit limit that is high is beneficial for emergency expenses or large purchases.
  • Use credit card rewards and cashback schemes to save when you purchase items on a regular basis.
  • Your credit utilization ratio is likely to increase. The credit utilization ratio refers to the percentage of your credit available that you are currently using. The use of multiple credit cards can boost your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more prone to spend too much and end up in debt.
  • It's easy to make impulsive expenditures that aren't feasible if there are a lot of credit card accounts.
  • Managing multiple credit cards can require the time and effort. It is even more difficult if the payment schedules vary.
  • In addition, more cards could result in an increase in credit utilization. A high CUR can harm your credit score.
  • Different cards come with different perks. Being too cautious with your cards can result in being deprived of many benefits.
  • On the other hand having too many accounts can make keeping track of due dates a challenge. It could result in penalties for late payments and a deterioration of credit score.

Key Points to Consider When Applying for Credit Cards

  1. Differential Benefits: Look for cards that offer various advantages, such as cashback, travel rewards, or low-interest rates.
  2. Annual Fees: Be sure that the card's benefits far exceed any annual fees.
  3. Interest Rates Lower APRs are important unless you're confident that you'll pay the balance every month.
  4. Credit Limit: A higher credit limit can help improve your credit utilization ratio if you don't reach the maximum limit.

Average Number Credit Cards Should I Have

Now that we've looked at the pros and cons of having several credit cards, let's examine how many credit card you should have. How many credit cards are enough? How many are sufficient?

Financial experts suggest having between 3 and five credit cards to ensure an rounded credit profile. This will provide many benefits and helps improve the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

A number of factors must be taken into consideration when deciding on the number of credit cards you have. These include:

  • The credit score and the history Your credit score and record will help determine the number of credit cards you'll need. You may only qualify for a couple of credit cards, if have poor credit scores or a short credit history.
  • Costs and income: Your earnings and expenses will be vital. If you have a good income and relatively low expenses, then you can manage more credit cards than someone with a lower income and higher expenses.
  • Financial goals and priorities The goals you have for your finances and the priorities will also influence the number of credit cards you should have. If you're looking to improve your credit score or earn rewards, consider owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some suggested numbers of credit cards based around different scenarios:

  • for those with no credit history If you don't have a credit history, you could qualify for one or two credit cards.
  • For people with average credit scores: If your credit score is average, you could have two to three credit cards.
  • For those with outstanding credit scores: If you have excellent credit 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 cards you're required to have let's examine how applying multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Owning multiple credit cards can have a positive effect on your credit score by a variety ways which include:

  • A higher credit utilization ratio Possessing multiple credit card accounts can aid in improving your CUR. The 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 these ways:

    • Higher risk of missed payments and delinquencies credit cards can lead to an increased chance of missing payments. There is also the risk of being in delinquency to your credit card accounts.
    • Increased credit inquiry and new accounts If you apply for several credit cards can be the cause of multiple credit inquiry as well as new accounts. Both can lower your credit score.
    • A lower average age for your account: Owning multiple credit cards can reduce the age average of your accounts. As a result, it could affect your credit score.
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