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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 numerous credit cards should I own?" This question becomes particularly pertinent if you are considering the addition of tradelines to your credit report. Let's decode this issue by providing you with the information and direction to make sound financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit cards you carry is not only an issue of personal convenience. It also influences the credit score. While you're aware that an account with a credit card will improve your credit score, you're likely puzzled as to how many you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we go into the number of credit cards you're required to own we'll first examine the advantages and disadvantages of having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're using multiple credit cards the credit limit may be higher. A high credit limit is great for emergency expenses or large purchases.
  • Use credit cards with rewards and cashback schemes to save when you purchase things daily.
  • The ratio of your credit utilization will rise. Your credit utilization rate refers to the amount of credit available that you are currently using. Credit cards with multiple accounts can boost your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more prone be tempted to overspend or go into debt.
  • It's simple to make unplanned purchases you can't afford when you're carrying a number of credit cards.
  • The management of multiple credit cards can take long and time. Particularly if your payment schedules change.
  • The more cards you have can lead to very high utilization of credit. A high CUR could harm your credit score.
  • Different cards provide different perks. Having too few cards means not gaining the many advantages.
  • On the flip side, having too many cards can make the process of keeping track of due dates a struggle. It can lead to 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 perks, such as travel rewards, cashback, or low-interest rates.
  2. Annual Fees: Be sure that the card's rewards outweigh any annual charges.
  3. Interest Rates: Low APRs are essential unless you'll pay off the debt every month.
  4. Credit Limit: A higher credit limit could boost your credit utilization ratio if you don't exceed it.

Average Number Credit Cards Should I Have

Now that we've looked at the pros and cons of using multiple credit card accounts, let's take a look at the number of credit cards to get. What is too many, and how many are enough?

Financial experts recommend having between 3 and 5 credit cards for a balanced credit profile. This offers a variety of benefits and can help improve the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

There are many factors to take into consideration when deciding how many credit cards to hold. These factors include:

  • History and credit score Your credit history and score will dictate the number of credit cards you should own. You are only eligible on one or two credit lines if you have poor credit scores or a credit history that is not as good.
  • Costs and income: Your earnings and expenses will be important. If you earn a high income and relatively low expenses, then you can manage more credit cards than someone with a lower income and more expenses.
  • Priorities and financial goals Priorities and financial goals will affect how many credit cards you can own. If you're trying to improve 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 around different scenarios:

  • For those with no credit history If there is no credit history for you, you may 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 people with excellent credit scores: If you have excellent credit scores, you may hold four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have examined how many credit cards you should own, let's explore how applying multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards could positively impact your credit score by a variety ways including:

  • Improved credit utilization ratio The fact that you have multiple credit cards can assist in improving your CUR. The 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 damage your credit score the following ways

    • Greater risk of missing payments and delinquencies: Having many credit card accounts could lead to the risk of having to miss payments. There is also a possibility of becoming indebted on your accounts.
    • Increased credit inquiry and new accounts Application for multiple credit cards can result in multiple credit queries as well as new accounts. Both of them can affect your credit score.
    • A lower average age for your account Multiple credit card accounts can lower the age average of your accounts. As a result, it can affect your credit score.
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