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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 enigmatizing questions for people in personal finance is "How many credit cards do I need?" This question becomes even more pertinent when you are contemplating adding trade lines to your credit profile. Let's take a look at this topic from a different angle, offering you the insight and guideline to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit or debit cards you use is not only one of your personal choices for convenience. It also affects your credit score. Although you're aware that having credit cards can help your credit score, you're probably confused about the number you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we discuss the number of credit card you should own before we look at the benefits and downsides of owning multiple credit card.

Advantages of Owning Multiple Credit Cards

  • If you own multiple credit cards your credit limit could be higher. A higher credit limit can be advantageous for emergencies or large purchases.
  • Use credit cards that reward you or cashback programs to reduce your expenses on items on a regular basis.
  • The ratio of your credit utilization will improve. Your credit utilization percentage refers to the amount of credit available that you are currently using. Using many credit cards can increase your credit score through splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards are a great way to increase the likelihood to overspend, and eventually fall into debt.
  • It's easy to make unplanned purchases that aren't financially feasible when you're using a variety of credit cards.
  • The management of multiple credit cards can take the time and effort. It is even more difficult if the payment times are different.
  • More cards can result in excessive credit utilization. A high CUR could hurt your credit score.
  • Different cards have different benefits. With too few cards, you risk being left out of many benefits.
  • On the other hand, having too many cards can make the task of calculating payment due dates a struggle. It could result in penalties for late payments and a deterioration of credit score.

Key Points to Consider When Applying for Credit Cards

  1. Different Benefits: Look for cards that provide a variety of perks, such as travel rewards, cashback or low-interest rates.
  2. Annual Fees: You must ensure the card's benefits far exceed any annual fees.
  3. Interest Rates A lower APR is vital unless you're sure that you'll finish the balance each month.
  4. Credit Limit: A higher credit limit can help your credit utilization ratio, as long as you don't exceed it.

Average Number Credit Cards Should I Have

After having looked at the advantages and disadvantages of having multiple credit cards, let's discuss how many credit cards to get. How many credit cards are too many, and how many are sufficient?

Financial experts recommend having 3 to 5 credit card accounts to ensure a well-rounded credit history. This gives you a variety of advantages and boosts the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

There are a variety of factors to consider when deciding on the number of credit cards one should have. These include:

  • History and credit score: Your credit score and record will help determine the number of credit cards you need. You could only qualify to apply for one or more credit cards if have a low credit score or a short credit history.
  • In addition to your expenses, your income and expenses can be vital. If you have a good income and very low expenses, it is possible to take on more credit cards than those with lower incomes and higher expenses.
  • Priorities and goals for your financial life The goals you have for your finances and the priorities will affect how many credit cards you need to own. If you're looking at improving your credit score or earn rewards, think about having several credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For people with no credit history If you're without credit, might qualify for one or two credit cards.
  • For people with average credit scores: If your credit score is average you may own two or three credit cards.
  • For those with excellent credit scores: If you have excellent credit scores You may have 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 supposed to have let's consider how having multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit card accounts can be beneficial to your credit score in various ways, including:

  • Improved credit utilization ratio The fact that you have multiple credit cards can assist in improving your CUR. The spreads your balances among 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 card accounts can be detrimental to your credit score in the following ways

    • Higher risk of missing payments and delinquencies: Having many credit cards can increase the possibility of more frequent missed payments. There is also a risk of being in delinquency to your credit card accounts.
    • Increased credit inquiry and new accounts Affiliation to multiple credit cards can be the cause of multiple credit inquiry and new accounts. Both can lower your credit score.
    • Lower average age of your account: Owning multiple credit cards can help lower the average age of your accounts. In turn, it can affect your credit score.
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