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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 frequently asked questions in the realm of personal finance is "How many credit card should I get?" This question becomes even more pertinent when you are considering the addition of tradelines to your credit profile. Let's clear up this issue giving you the knowledge 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 isn't just a matter of personal convenience. It also affects your credit score. Although you're aware of the fact that having a credit line can help your credit score, you're likely not sure how many cards you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we go into how many credit cards you need to have we'll first take a look at the benefits and downsides of owning multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you are a holder of multiple credit cards your credit limit might be higher. A credit limit that is high is great for emergency expenses or large purchases.
  • Use credit cards that reward you and cashback programs to save money when you purchase things on a daily basis.
  • Your credit utilization ratio will improve. Your credit utilization ratio is a reference to the amount of available credit that you are currently using. The use of multiple credit cards can improve your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more likely be tempted to overspend or go into debt.
  • It's simple to make unplanned purchases that you aren't able to afford when you're carrying a number of credit cards.
  • The management of multiple credit cards could require considerable time and effort. Particularly if your payment dates are different.
  • In addition, more cards could result in very high utilization of credit. A high CUR can harm your credit score.
  • Different cards provide different perks. With too few cards, you risk being left out of many advantages.
  • On the flip side having too many cards can make the process of keeping track of due dates a challenge. It could result in penalties for late payments and a deterioration of credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diversity of Benefits Find cards with various perks, such as travel rewards, cashback or low-interest rates.
  2. Annual Fees: Be sure that the card's rewards outweigh any annual costs.
  3. Interest Rates: A lower APR is crucial unless you're confident you'll pay off the balance every month.
  4. Credit Limit: A higher credit limit can improve your credit utilization ratio as long as you don't exceed it.

Average Number Credit Cards Should I Have

Now that we have looked at the advantages and disadvantages of having multiple credit cards, let's consider how many credit cards you should have. How many credit cards is excessive, and how many are enough?

Financial experts recommend having between 3 and five credit cards in order to build a complete credit profile. This will provide many benefits and helps improve the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

There are many factors to take into consideration when deciding on the number of credit cards you have. These factors include:

  • The credit score and the history: Your credit score and record will help determine the number of credit cards to have. You'll only be able to qualify for one or two credit card if you have an unsatisfactory credit score or a limited credit history.
  • The amount you earn and the expenses you incur: Your income and expenses will also be important. If you have a high income and low expenses, you could use more credit cards than those with lower incomes and higher expenses.
  • Priorities and goals for your financial life Priorities and financial goals can influence the number of credit-cards you need to own. If you are looking to improve the score on your credit report or earn rewards think about having a variety of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For those with no credit history If your credit score is not great, you may qualify for one or two credit cards.
  • For people with average credit scores If you have an average credit score, it is possible to have two to three credit cards.
  • for those with high credit scores: If you have excellent credit You may have four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've examined the number of credit cards you should own 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 different ways in which they include:

  • Improved credit utilization ratio The fact that you have 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

A number of credit cards on your account can damage your credit score the following ways

    • Higher risk of missing payments and delinquencies: Owning a lot of credit cards could result in an increased chance of missing payments. There is also a chance of becoming delinquent with your account.
    • Increased credit inquiries and the opening of new accounts When you apply for multiple credit cards can produce multiple credit requests as well as new accounts. Both of them can affect your credit score.
    • Lower average account age The use of multiple credit cards can help reduce the average age of your accounts. As a result, it can affect your credit score.
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