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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 issues that confuse people in personal finance is "How much credit card do I require?" This question becomes crucial when you are considering the addition of trade lines to your credit profile. Let's demystify this topic, offering you the insight and roadmap to make confident financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit card you use is not just a matter of personal convenience. It also affects the credit score. Although you're aware that having credit cards can help your credit score, you're probably puzzled as to how many you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we get into how many credit cards you're supposed 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're a credit card holder with multiple cards and credit limits, they could be greater. A credit limit that is high is helpful for emergency expenses or large purchases.
  • Make use of credit cards that have rewards and cashback offers to save you money when you buy things on a daily basis.
  • Your credit utilization ratio will increase. Your credit utilization ratio is related to the percentage of your available credit that you currently use. Credit cards with multiple accounts can boost your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards are a great way to increase the likelihood to overspend and go into debt.
  • It's simple to make unplanned purchases that you aren't able to afford when you have many credit cards.
  • Making multiple payments with credit cards can take long and time. Even more so if payment schedules vary.
  • A lot of cards can result in the utilization of credit to be high. A high CUR can affect your credit score.
  • Different cards come with different perks. Insufficient cards mean not getting all the advantages.
  • On the flip side the other hand, having a lot of cards can make managing payment due dates a challenge. It can lead to late fees and a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Variety of Benefits: Look for cards that offer various advantages, such as travel rewards, cashback or low-interest rates.
  2. Annual Fees: It is important to make sure the card's rewards outweigh the annual fee.
  3. Interest Rates The APR should be low. essential unless you're certain that you'll have enough money to 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 pros and cons of having multiple credit card accounts, let's take a look at the number of credit cards you need to have. What is too much? And how many are sufficient?

Financial experts recommend having 3 to five credit cards to ensure a comprehensive credit profile. This can provide a variety of advantages and improves the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

Many factors should be considered when deciding on the number of credit cards to hold. These include:

  • The credit score and the history Your credit score and past history determine how many credit cards you should own. You will only be eligible only for one or two credit accounts if have poor credit scores or have a poor credit record.
  • The amount of your income and expenses can be vital. If you earn a great income and low expenses, you may be able to handle more credit card debt than those with lower incomes and higher expenses.
  • Financial goals and priorities: Your goals in terms of finances and priorities will also influence the number of credit-cards you should possess. If you're trying to improve your credit rating 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 that are based off of different scenarios:

  • for those with no credit history: If you do not have credit history, then you could be eligible for one or two credit cards.
  • For people with a good credit score: If you're averaging credit score, you could own two or three credit cards.
  • for those with high credit scores: If you have excellent credit you could have four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've looked at how many credit cards you're supposed to have, 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 be beneficial to your credit score through a variety of ways including:

  • Better credit utilization ratio: The use of multiple credit cards may assist in improving your CUR. The spreads your balances across 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 cards could harm your credit score in the following ways:

    • Risk of missed payments and delinquencies: Having many credit cards can create greater risk of missing payments. Also, there is a chance of being in delinquency to your credit card accounts.
    • Increased credit inquiry and new accounts: Applying for multiple credit cards can lead to multiple credit inquiries as well as new accounts. Both can negatively impact your credit score.
    • Lower average age of your account The presence of multiple credit card accounts can reduce the average age of your accounts. As a result, it could lower your credit score.
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