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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 with regards to personal finance is "How many credit cards should I have?" This question becomes particularly pertinent if you are considering the addition of tradelines to your credit profile. Let's clear up this issue and provide you with the understanding and guideline to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit cards you have is not just something that you can do for personal convenience. It also affects your credit score. While you know that having credit cards can help your credit score, you're likely puzzled as to how many you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we get into how many credit cards you're required to own, let's first 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 can be greater. A higher credit limit can be beneficial for emergency expenses or large purchases.
  • Use credit cards that have rewards or cashback programs to reduce your expenses on things on a daily basis.
  • Your credit utilization ratio is likely to increase. Your credit utilization rate refers to the amount of credit available that you are currently using. A variety of credit cards can increase your credit score through dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more likely to spend more than you can afford and then fall into debt.
  • It's simple to make unplanned purchases that aren't affordable when you're carrying a number of credit cards.
  • The management of multiple credit cards can require more time and effort. More so if the payment schedules vary.
  • More cards can lead to high levels of credit utilization. A high CUR can affect your credit score.
  • Different cards come with different perks. The lack of cards means you aren't getting the full benefits.
  • On the flip side being a card holder with too many can make keeping track of payments due dates difficult. It could lead 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 travel rewards, cashback, or low-interest rates.
  2. Annual Fees You must ensure the card's benefits surpass the annual fee.
  3. Interest Rates: A lower APR is crucial unless you're confident that you'll finish the balance every month.
  4. Credit Limit: A higher credit limit can help your credit utilization ratio, provided that you don't max it out.

Average Number Credit Cards Should I Have

After having looked at the advantages and disadvantages of owning multiple credit cards, let's consider how many credit cards you should be carrying. How many credit cards are too much? And how many are enough?

Financial experts suggest having between 3 and five credit cards for an rounded credit profile. This will provide many benefits and helps improve the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

Several factors must be considered when deciding on the number of credit cards you will own. These include:

  • History and credit score: Your credit score and history will determine the number of credit cards you need. You'll only be able to qualify for one or two credit cards if you have low credit scores or have a poor credit record.
  • Spending and income: Your earnings and expenses will be vital. If you have a high income and low expenses, you may manage more credit cards than those with lower incomes and more expenses.
  • Financial goals and priorities Your financial objectives and priorities can affect how many credit cards you should possess. If you're looking at improving your credit rating, or earn rewards points, you should consider owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some suggested numbers of credit cards, based upon various scenarios:

  • For people who do not have credit history If there is no credit history for you, you may be eligible for one or two credit cards.
  • For those who have average credit scores If you're averaging credit score you may have a range of two to three credit cards.
  • For those with excellent credit scores: If you have excellent credit scores You may have at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've examined the number of 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

Possessing multiple credit cards may have a positive impact on your credit score in several ways for example:

  • Increased credit utilization ratio Multiple credit cards can help improve 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

Possessing multiple credit cards can be detrimental to your credit score in the following ways:

    • Greater risk of missing payments and delinquencies: having a large number of credit cards can create an increased chance of missing payments. There is also a possibility of being in delinquency on your accounts.
    • Credit inquiries are increasing and so are new accounts Inquiring for multiple credit cards could produce multiple credit requests as well as new accounts. Both of them could affect your credit score.
    • Lower average age of your account: Owning multiple credit cards can help lower the average age of your accounts. In turn, it can affect your credit score.
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