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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


A question that is often asked by people in personal finance is "How how many credit-cards should I carry?" This question becomes particularly pertinent if you are contemplating adding trade lines to your credit profile. Let's dispel this nagging issue and provide you with the knowledge and guidance to make shrewd financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit or debit cards you use is not just one of your personal choices for convenience. It also influences your credit score. Although you're aware of the fact that having the right credit card can boost your credit score, you're likely perplexed about how many you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we go into the number of credit cards you need to have before we look at the advantages and disadvantages of having several credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're a credit card holder with multiple cards the credit limit may be greater. A high credit limit is ideal for emergencies and large purchases.
  • Use credit card rewards as well as cashback to save when you purchase things daily.
  • Your ratio of credit utilization will improve. Your credit utilization ratio is a reference to the amount of available credit that you are currently using. Making use of a variety of credit cards could improve your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards are a great way to increase the likelihood to spend more than you can afford and then fall into debt.
  • It's easy for people to make unplanned purchases you can't afford when you have a lot of credit cards.
  • The management of multiple credit cards can take long and time. It is even more difficult if the payment schedules are different.
  • In addition, more cards could result in high credit utilization. A high CUR can affect your credit score.
  • Different cards have different benefits. Too many cards could mean being left out of many benefits.
  • On the other hand, having too many cards can make keeping track of due dates a struggle. It can result to overdue fees and damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits Find cards that have various advantages, such as travel rewards, cashback or low-interest rates.
  2. Annual Fees: Make sure the card's benefits exceed annual fees.
  3. Interest Rates: It is essential unless you're certain you'll pay off the balance every month.
  4. Credit Limit: A higher credit limit can improve your credit utilization rate, if that you don't go over it.

Average Number Credit Cards Should I Have

After having looked at the advantages and disadvantages of owning several credit cards, let's think about the number of credit cards you should be carrying. How many credit card accounts is too much? And how many are sufficient?

Financial experts suggest having between 3 and five credit cards for a well-rounded credit history. This gives you a variety of benefits and helps improve the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

There are a variety of factors to consider when deciding on the number of credit cards you have. These factors include:

  • Credit score and history Your credit scores and histories will affect the number of credit cards to get. You'll only be able to qualify to get one or two credit cards in the event that you have poor credit scores or have a poor credit record.
  • Spending and income: Your income and expenses can be vital. If you have an excellent income and relatively low expenses, then you can have more credit card accounts than those with lower incomes and higher expenses.
  • Priorities and goals for your financial life Your financial objectives and priorities will influence the number of credit-cards you should possess. If you want to improve your credit score or earn rewards you should consider 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 people 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 credit score of average If you're averaging credit score, you could have between two and three credit cards.
  • For people with excellent credit scores: If you have an excellent credit score, you may hold at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've looked at how many credit cards should you have Let's look at how using multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Owning multiple credit cards can be beneficial to your credit score in many ways and include:

  • Increased credit utilization ratio: The fact that you have multiple credit cards can assist in improving your CUR. It spreads out your balances among 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 affect your credit score in these ways:

    • Risk of missed payments and delinquencies: Owning a lot of credit cards can create an increased risk of not making payments. There is also the possibility of becoming delinquent on your accounts.
    • Credit inquiries are increasing and so are new accounts: Applying for multiple credit cards could result in multiple credit inquiries and new accounts. Both of them can affect your credit score.
    • A lower average age for your account The fact that you have multiple credit cards can help reduce the average age of your accounts. This could lower your credit score.
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