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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 in their personal finances is "How many credit cards can I use?" This question becomes more important when you are considering the addition of tradelines to your credit score. Let's decode this issue giving you the insights and guidelines 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 an issue of personal choice. It also affects your credit score. While you're aware that an account with a credit card will improve your credit score, you're likely confused about the number you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we look at the number of credit cards to get let's look at the advantages and disadvantages associated with owning more than one credit card.

Advantages of Owning Multiple Credit Cards

  • If you're carrying multiple credit card and credit limits, they could be higher. A higher credit limit is handy for emergencies or large purchases.
  • Use credit cards that have rewards and cashback programs to save money when you purchase items on a regular basis.
  • Your ratio of credit utilization is likely to increase. The credit utilization ratio refers to the amount of credit available that you currently use. Using many credit cards can boost your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can increase your chances to overspend and fall into debt.
  • It's simple to make unplanned expenses that you're unable to afford if you're using a variety of credit cards.
  • managing multiple credit cards may require much time and effort. Particularly if the payment schedules vary.
  • In addition, more cards could result in excessive credit utilization. A high CUR can impact your credit score.
  • Different cards have different benefits. Too many cards could mean missing out on many advantages.
  • On the other hand being a card holder with too many can make managing payment due dates a struggle. It can lead to high interest and a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits Find cards that come with advantages, such as cashback, travel rewards, or low-interest rates.
  2. Annual Fees: Be sure that the card's rewards outweigh any annual costs.
  3. Interest Rates Lower APRs are crucial unless you're confident that you'll finish the balance every month.
  4. Credit Limit: A higher credit limit can boost 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 discuss how many credit cards you should own. What is enough? And how many are sufficient?

Financial experts recommend having 3 to five credit cards to create a balanced credit profile. This will provide many advantages and also improves the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

A variety of factors should be considered when deciding how many credit cards to own. These factors include:

  • History and credit score Your credit score and history will determine the number of credit cards you can have. It is possible to only qualify for credit cards with one or two points if have low credit scores or a poor credit history.
  • Earnings and expenses: Your income and expenses can be important. If you have a good income and little expenses, you are able to have more credit card accounts than those with lower incomes and higher expenses.
  • Financial goals and priorities: Your financial objectives and priorities will determine how many credit card you need to own. If you're hoping to improve your credit score or earn rewards, you should consider owning a number of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For those with no credit history: If you're without credit, might be eligible for one or two credit cards.
  • For those with average credit scores If you're averaging credit score, then you could have a range of two to three credit cards.
  • For those with excellent credit scores: If you have excellent credit you could be the owner of four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've discussed how many credit cards you're supposed to have let's consider how having multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Owning multiple credit cards can have a positive impact on your credit score in a variety of ways such as:

  • Improved credit utilization ratio Possessing multiple credit card accounts can 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

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

    • Higher risk of missed payments and delinquencies: Having many credit cards can create an increased risk of avoiding payments. There is also the possibility of being in delinquency to your credit card accounts.
    • Increased credit inquiry and new accounts Application for multiple credit cards can produce multiple credit requests and new accounts. Both can impact your credit score.
    • A lower average age for your account The use of multiple credit cards can help reduce the age average of your accounts. This could affect your credit score.
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