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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 when it comes to personal finance is "How many credit cards should I have?" This question becomes crucial when you are contemplating adding tradelines to your credit report. Let's dispel this nagging issue by providing you with the information and the path to take confident financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit and debit cards you have isn't just one of your personal choices for convenience. It also influences the credit score. Although you're aware of the fact that having a credit line can help your credit score, you're likely confused about the number you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we go into the number of credit cards you need to have let's look at the advantages and disadvantages of owning multiple credit card.

Advantages of Owning Multiple Credit Cards

  • If you are a holder of multiple credit cards your credit limit will be greater. A credit limit that is high is beneficial for emergency expenses or large purchases.
  • Use credit cards that reward you and cashback programs to save money when you purchase items on a regular basis.
  • Your ratio of credit utilization will improve. Your credit utilization percentage refers to the amount of credit available that you are currently using. Utilizing multiple credit cards can improve your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards could make it more likely to overspend, and eventually fall into debt.
  • It's easy for people to make unplanned expenses that you're unable to afford if you have a lot of credit cards.
  • Controlling multiple credit cards can require an amount of time and effort. Particularly if the payment schedules change.
  • More credit cards can lead to the utilization of credit to be high. A high CUR can negatively impact your credit score.
  • Different cards offer different perks. Being too cautious with your cards can result in not getting all the advantages.
  • On the other hand it is possible that having too many cards can make keeping track of due dates a challenge. It can result to penalties for late payments and a deterioration of credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits Look for cards with various perks, such as cashback, travel rewards, or low-interest rates.
  2. Annual Fees: Check to ensure that the card's rewards outweigh any annual fees.
  3. Interest Rates Low APRs are important unless you're confident that you'll repay the balance every month.
  4. Credit Limit: A higher credit limit can increase your credit utilization ratio as long as you don't reach the maximum limit.

Average Number Credit Cards Should I Have

After looking at the pros and cons of having multiple credit cards, let's discuss how many credit cards you should be carrying. How many credit cards is too much, and how many are sufficient?

Financial experts recommend having 3 to 5 credit cards to have an rounded credit profile. This can offer a variety 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 on the number of credit cards you will own. These include:

  • Credit score and past history Your credit scores and histories will affect how many credit cards to get. You will only be eligible for one or two credit card if have a low credit score or a poor credit history.
  • Costs and income: Your income and expenses will also be important. If you earn a great income and minimal expenses, you might have more credit cards than those with lower incomes and higher expenses.
  • Priorities and goals for your financial life: The goals you have for your finances and the priorities will affect how many credit cards you need to own. If you're trying 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 card numbers based on different scenarios:

  • for those with no credit history: If you're not creditworthy, you could be eligible for one or two credit cards.
  • For people having average credit scores If you have an average credit score, you may own two or three credit cards.
  • For people with outstanding credit scores: If you have excellent credit scores you may have four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have discussed how many credit cards you should own Let's see how applying multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

The fact that you have multiple credit cards can positively impact your credit score, in a variety ways which include:

  • Better credit utilization ratio: Possessing multiple credit cards could help improve your CUR. The 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 be detrimental to your credit score in the following ways:

    • Increased risk of missing payments and delinquencies: Owning a lot of credit card accounts can mean a greater chance of missing payments. There's also a chance of being in delinquency to your credit card accounts.
    • More credit inquiries and new accounts If you apply for several credit cards could create multiple credit inquires as well as new accounts. Both can negatively impact your credit score.
    • Lower average account age Multiple credit cards can lower the age average of your accounts. In turn, it can lower your credit score.
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