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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 with regard to their finances is "How many credit cards should I have?" This question becomes more pertinent when you are thinking about adding trade lines to your credit profile. Let's demystify this topic by providing you with the facts and direction to make sound financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit and debit cards you have is not just an issue of personal choice. It also influences your credit score. While you're aware that an account with a credit card will improve your credit score, you're probably uncertain about the amount you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we dive into the number of credit cards you're required to own Let's first consider the advantages and disadvantages of owning a variety of credit cards.

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 advantageous for emergencies or large purchases.
  • Use credit card rewards and cashback plans to cut down on costs when you purchase things on a daily basis.
  • Your ratio of credit utilization will rise. Your credit utilization rate refers to the amount of credit available that you currently use. The use of multiple credit cards can boost 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 easy, and often unplanned, to make purchases that you aren't able to afford when you're using a variety of credit cards.
  • Controlling multiple credit cards can take the time and effort. It is even more difficult if the payment schedules change.
  • A lot of cards can result in excessive credit utilization. A high CUR could harm your credit score.
  • Different cards provide different perks. A lack of cards can mean not gaining the many benefits.
  • On the flip side having too many credit cards can make keeping track of payment due dates a struggle. This can result in problems with late fees and a lower credit score.

Key Points to Consider When Applying for Credit Cards

  1. Variety of Benefits: Find cards that offer various benefits, including cashback, travel rewards, or low-interest rates.
  2. Annual Fees: It is important to make sure the card's advantages outweigh annual fees.
  3. Interest Rates In order to get a low interest rate, it's crucial unless you're confident that you'll be able to pay off the balance every month.
  4. Credit Limit: A higher credit limit can help your credit utilization ratio, so long as you don't use it to the max.

Average Number Credit Cards Should I Have

After looking at the advantages and disadvantages of owning multiple credit cards let's explore how many credit cards you should be carrying. What is too much, and how many are enough?

Financial experts recommend having 3 to 5 credit cards for an rounded credit profile. This allows for various advantages and can improve the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

Numerous factors should be taken into account when deciding on the number of credit cards to have. These include:

  • Credit score and past history: Your credit score and history will determine how many credit card you should have. You'll only be able to qualify only for one or two credit accounts if have an unsatisfactory credit score or a weak credit history.
  • Earnings and expenses: Your expenses and income will also be important. If you've got a high income and low expenses, you could manage more credit card payments than someone with a lower income and higher expenses.
  • Priorities and goals for your financial life Your financial goals and priorities also affect how many credit cards you can own. If you want to improve the credit score of your business or earn rewards think about having several credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For those with no credit history: If you have no credit history, you could be eligible for one or two credit cards.
  • For people having average credit scores If you're averaging credit score, it is possible to have two to three credit cards.
  • For those with outstanding credit scores: If you have an excellent credit score you may have four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have looked at how many credit cards you should own Let's take a look at how applying multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards have a positive effect on your credit score through a variety of ways that include:

  • Better credit utilization ratio: Having multiple credit cards could aid in improving your CUR. The spreads your balances across several 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 cause damage to your credit score the following ways

    • Increased risk of missing payments and delinquencies: Having many credit card accounts can mean a greater chance of missing payments. There's also a chance of being in delinquency on your accounts.
    • New credit inquiries and increased credit accounts The application process for multiple credit cards could result in multiple credit inquiries and new accounts. Both of them can affect your credit score.
    • A lower average age for your account: Owning multiple credit cards can help reduce the age average of your accounts. In turn, it can lower your credit score.
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