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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 the realm of personal finance is "How how many credit-cards should I carry?" This question becomes much more relevant when you are contemplating adding trade lines to your credit profile. Let's decode this issue and provide you with the understanding and guidelines to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

Your number of credit cards is not only one of your personal choices for convenience. It also influences your credit score. Although you're aware that having a credit card can benefit your credit score, you're likely confused about how many credit cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we dive into how many credit card you should own let's look at the benefits and downsides when you have multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you have multiple credit cards, your credit limit can be greater. A high credit limit is ideal for emergencies and large purchases.
  • Use credit card rewards and cashback schemes to save on items on a regular basis.
  • Your ratio of credit utilization is likely to increase. Your credit utilization ratio refers to the amount of credit available that you are currently using. Utilizing multiple credit cards can increase your credit score through splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more prone to spend too much and end up in debt.
  • It's easy, and often unplanned, to make purchases that aren't affordable when you have multiple credit cards.
  • Making multiple payments with credit cards can require much time and effort. This is especially true if payment timetables change.
  • More cards can result in very high utilization of credit. A high CUR could harm your credit score.
  • Different cards come with different perks. Too many cards could mean losing out on a variety of benefits.
  • On the flip side it is possible that having too many cards can make keeping track of payments due dates a struggle. This can result in the occurrence of late fees and damage to your credit score.

Key Points to Consider When Applying for Credit Cards

  1. Different Benefits: Look for cards that offer various benefits, including travel rewards, cashback or low-interest rates.
  2. Annual Fees You must ensure the card's benefits outweigh the annual fee.
  3. Interest Rates: An APR that is low is essential unless you're certain that you'll repay the balance each month.
  4. Credit Limit: A higher credit limit could boost your credit utilization rate, if you don't exceed the limit.

Average Number Credit Cards Should I Have

After looking at the advantages and disadvantages of owning multiple credit card accounts, let's see how many credit cards you need to have. How many credit cards are too much, and how many are enough?

Financial experts suggest having between 3 and 5 credit cards for a well-rounded credit history. This can provide a variety of benefits and helps with the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

Several factors must be considered when deciding on the number of credit cards to keep. These include:

  • History and credit score The credit score you have and your history will decide the number of credit cards to have. You are only eligible on one or two credit lines if have poor credit scores or a weak credit history.
  • Budget and income: Your expenses and income will also be vital. If you have a substantial income and minimal expenses, you might take on more credit cards than those with lower incomes and higher expenses.
  • Priorities and financial goals Your financial goals and priorities will affect the number and type of credit cards you should own. If you're looking for ways to improve the score on your credit report 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 that are based off of different scenarios:

  • for those with no credit history If you're without credit, might qualify for one or two credit cards.
  • For those who have average credit scores If your credit score is average, it is possible to have up to three credit cards.
  • for those with high credit scores: If you have an excellent credit score, you may own four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

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

Positive Impact of Owning Multiple Credit Cards on Credit Score

The fact that you have multiple credit cards can improve your credit score through a variety of ways, including:

  • Increased credit utilization ratio Multiple credit cards can assist in improving your CUR. It spreads out 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

Having multiple credit card accounts can affect your credit score in the following ways:

    • Higher risk of missing payments and delinquencies: having a large number of credit cards can result in a higher risk of missing payments. There is also a chance of being in delinquency on your accounts.
    • More credit inquiries and new accounts Inquiring for multiple credit cards can create multiple credit inquires as well as new accounts. Both of these could lower your credit score.
    • Lower average account age: Owning multiple credit cards can help lower the average age of your accounts. As a result, it can affect your credit score.
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