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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 when it comes to personal finance is "How many credit accounts should I hold?" This question becomes much more relevant when you are thinking about adding trade lines to your credit profile. Let's clarify this issue and provide you with the understanding and guidance to make shrewd financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit and debit cards you have is not only an issue of personal preference. It also influences the credit score. While you're aware that a credit card can improve your credit score, you're likely puzzled as to how many you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we go into the number of credit cards you should own, let's first look at the advantages and disadvantages when you have multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you own multiple credit cards the credit limit may be greater. A credit limit of high amount is handy for emergencies or large purchases.
  • Make use of credit cards with rewards or cashback programs to reduce your expenses when you purchase things on a daily basis.
  • Your credit utilization ratio will rise. Your credit utilization percentage refers to the amount of credit available that you currently use. Utilizing multiple credit cards may boost your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more likely to spend too much and end up in debt.
  • It's easy to make unplanned purchase that you cannot afford if you're using a variety of credit cards.
  • Managing multiple credit cards can take the time and effort. More so if the payment dates are different.
  • More cards can lead to very high utilization of credit. A high CUR can impact your credit score.
  • Different cards have different benefits. Being too cautious with your cards can result in missing out on many benefits.
  • On the flip side, having too many cards can make keeping track of due dates a struggle. This can result in charges for late payments as well as a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits: Find cards that have various perks, such as cashback, travel rewards, or low-interest rates.
  2. Annual Fees Check to ensure that the card's advantages outweigh annual fees.
  3. Interest Rates: A lower APR is crucial unless you're confident that you'll settle the balance every month.
  4. Credit Limit: A higher credit limit can benefit your credit utilization ratio, as long as you don't max it out.

Average Number Credit Cards Should I Have

After having looked at the pros and cons of owning multiple credit cards, let's consider how many credit cards you should have. What is enough? How many are enough?

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

Factors to Consider When Deciding The Number Credit Cards to Own

Several factors must be considered when deciding how many credit card accounts to own. These factors include:

  • History and credit score: Your credit score as well as your past experience will determine how many credit cards you can have. You will only be eligible for a couple of credit cards, if have low credit scores or a poor credit history.
  • The amount you earn and the expenses you incur: Your income and expenses can be crucial. If you earn a great income and lower expenses, you will be able to manage more credit cards than those with lower incomes and more expenses.
  • Priorities and goals for your financial life Priorities and financial goals can affect the number and type of credit cards you can own. If you're looking to boost your credit rating, or earn rewards points, think about owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For people who do not have credit history If you don't have a credit history, you may be eligible for one or two credit cards.
  • For those who have average credit scores If you're averaging credit score, you may be able to have three or more credit cards.
  • for those with high credit scores: If you have an excellent credit score you may be able to hold at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

After we've examined the number of credit cards you're required to have Let's take a look at how applying multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards positively impact your credit score in different ways for example:

  • A higher credit utilization ratio The use of multiple credit cards may help improve 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

Owning multiple credit cards can be detrimental to your credit score in the following ways:

    • Risk of missed payments and delinquencies: Having many credit card accounts can mean an increased risk of not making payments. Also, there is a chance of being in delinquency on your accounts.
    • Increased credit inquiries and the opening of new accounts When you apply for multiple credit cards can lead to multiple credit inquiries as well as new accounts. Both of these can affect your credit score.
    • Lower average account age Multiple credit cards can help lower the age average of your accounts. In turn, it could affect your credit score.
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