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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 question that boggles people in the field of personal finance is "How numerous credit cards should I own?" This question becomes particularly pertinent if you are considering the addition of tradelines to your credit profile. Let's clear up this issue and provide you with the knowledge and guidelines to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

Your number of credit cards is not just one of your personal choices for convenience. It also influences the credit score. While you're aware that a credit card can improve your credit score, you're likely confused about the number you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we look at how many credit cards you should have Let's first consider 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 higher. A credit limit of high amount is advantageous for emergencies or large purchases.
  • Use credit card rewards or cashback rewards to save some money when you purchase items on a regular basis.
  • Your ratio of credit utilization is likely to increase. Your credit utilization number refers to the percentage of your credit available that you are currently using. Utilizing multiple credit cards may improve your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more likely to overspend and fall into debt.
  • It's easy to make impulsive purchases that aren't affordable when you have several credit cards.
  • Managing multiple credit cards can take time and effort. It is even more difficult if the payment schedules change.
  • More credit cards can lead to high levels of credit utilization. A high CUR can negatively impact your credit score.
  • Different cards come with different perks. Being too cautious with your cards can result in not getting all the benefits.
  • On the other hand it is possible that having too many cards can make the task of calculating payment due dates a struggle. It can lead to unpaid fees and a degraded credit score.

Key Points to Consider When Applying for Credit Cards

  1. Variety of Benefits: Find cards that provide various benefits, including cashback, travel rewards, or low-interest rates.
  2. Annual Fees You must ensure the card's rewards outweigh any annual fees.
  3. Interest Rates: A lower APR is essential unless you're certain you'll pay off the debt each month.
  4. Credit Limit: A higher credit limit can help improve your credit utilization ratio as long as you don't exceed it.

Average Number Credit Cards Should I Have

After having looked at the pros and cons of having multiple credit cards, let's discuss the number of credit card you should have. How many credit cards are too much, and how many are enough?

Financial experts recommend having 3 to 5 credit cards for a balanced credit profile. This gives you many advantages and also improves the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

Numerous factors should be taken into account when deciding how many credit cards one should have. These include:

  • Credit score and history: Your credit score and past history determine the number of credit card you should have. You'll only be able to qualify for one or two credit cards if have low credit scores or a weak credit history.
  • The amount you earn and the expenses you incur: Your income and expenses will also be crucial. If you earn a high income and minimal expenses, you might manage more credit card payments than those with lower incomes and more expenses.
  • Priorities and goals for your financial life: Your financial goals and priorities can influence the number of credit cards you can own. If you're looking at improving your credit score and earn rewards, think about owning a number of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For those who have no credit history: If you have no credit history, you could be eligible for one or two credit cards.
  • For people who have average credit scores If your credit score is average, you might have two to three credit cards.
  • For people with excellent credit scores: If you have excellent credit you could have four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've examined the number of credit card you should have let's examine how applying multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Possessing multiple credit cards may have a positive impact on your credit score in various ways for example:

  • Improved credit utilization ratio: Multiple credit cards 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 affect your credit score in the following ways:

    • Higher risk of missing payments and delinquencies credit cards can create an increased risk of not making payments. There is also the possibility of becoming delinquent on your accounts.
    • Increased credit inquiries and the opening of new accounts Application for multiple credit cards can result in multiple credit inquiries as well as new accounts. Both of these can affect your credit score.
    • Lower average account age: 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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