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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 personal finance is "How many credit cards do I need?" This question becomes even more relevant when you are thinking about adding trade lines to your credit profile. Let's break down this subject by providing you with the facts and guidelines to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit card you use is not only an issue of personal convenience. It also affects your credit score. Although you're aware that having credit cards can boost your credit score, you're probably confused as to how many credit cards you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we begin to discuss the number of credit cards to get before we look at the advantages and disadvantages of owning a variety of credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're a credit card holder with multiple cards your credit limit could be higher. A higher credit limit is ideal for emergencies or large purchases.
  • Make use of credit cards that have rewards and cashback program to cut costs when you purchase things daily.
  • The ratio of your credit utilization will increase. Your credit utilization number refers to the amount of available credit that you are currently using. Making use of a variety of credit cards could increase your credit score through dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards are a great way to increase the likelihood to overspend and enter debt.
  • It's easy for people to make unplanned purchases you can't afford when you're juggling multiple credit cards.
  • Making multiple payments with credit cards can require some time and energy. Particularly if the pay dates are different.
  • The more cards you have can lead to the utilization of credit to be high. A high CUR can negatively impact your credit score.
  • Different cards come with different perks. A lack of cards can mean being left out of many advantages.
  • On the flip side being a card holder with too many can make keeping track of payments due dates a challenge. It could lead to high interest and a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Different Benefits: Look for cards that have various advantages, such as travel rewards, cashback or low-interest rates.
  2. Annual Fees It is important to make sure the card's benefits are greater than the annual fee.
  3. Interest Rates It is vital unless you're sure you'll pay off the balance every month.
  4. Credit Limit: A higher credit limit can boost your credit utilization ratio, if you don't reach the maximum limit.

Average Number Credit Cards Should I Have

After looking at the advantages and disadvantages of owning several credit cards, let's think about how many credit cards you need to have. What is enough? And how many are enough?

Financial experts suggest having 3 to five credit cards for a complete credit profile. This will provide many benefits and can help improve the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

Several factors must be considered when deciding how many credit cards to own. These factors include:

  • Credit score and history: Your credit score and record will help determine the number of credit cards you'll need. You're only eligible to get one or two credit cards in the event that have poor credit scores or a poor credit history.
  • The amount of your expenses and income will also be important. If you have an excellent income and minimal expenses, you might be able to handle more credit card debt than someone with a lower income and higher expenses.
  • Priorities and goals for your financial life Your financial objectives and priorities will affect the number of credit card you can own. If you're looking at improving your credit score or earn rewards, consider 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 people who do not have credit history: If you don't have a credit history, you may qualify for one or two credit cards.
  • For people with credit scores that are average: If you're averaging credit score, you may have between two and three credit cards.
  • For people with excellent credit scores: If you have excellent credit you can have at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've examined the number of credit cards should you have let's consider how having 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 positively impact your credit score in many ways such as:

  • A higher credit utilization ratio Owning multiple credit cards can assist in improving your CUR. It spreads out the balances on 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

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

    • Greater risk of not paying and delinquencies: having a large number of credit cards may result in an increased risk of avoiding payments. There is also the possibility of being in delinquency to your credit card accounts.
    • Increased credit inquiries and the opening of new accounts: Applying for multiple credit cards could result in multiple credit inquiries as well as new accounts. Both can negatively impact your credit score.
    • Lower average account age The use of multiple credit cards can lower the age average of your accounts. This can lower your credit score.
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