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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 question that perplexes individuals in the realm of personal finance is "How many credit card should I get?" This question becomes even more relevant when you are thinking about adding tradelines to your credit report. Let's clarify this issue by providing you with the information and guidance to make shrewd financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit cards you carry isn't just something that you can do for personal convenience. It also affects the credit score. Although you're aware that having a credit card can benefit your credit score, you're probably confused about the number you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we discuss how many credit cards you should have we'll first take a look at the benefits and downsides of owning a variety of credit cards.

Advantages of Owning Multiple Credit Cards

  • If you've got several credit cards your credit limit might be higher. A higher credit limit is ideal for emergencies or large purchases.
  • Use credit cards that have rewards and cashback programs to save money when you buy things on a daily basis.
  • Your credit utilization ratio will rise. Your credit utilization rate refers to the percentage of your available credit that you currently use. The use of multiple credit cards can boost your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more prone to overspend, and eventually fall into debt.
  • It's easy, and often unplanned, to make purchase that you cannot afford if you have multiple credit cards.
  • It can be difficult to manage multiple credit card accounts. It will require much time and effort. It is even more difficult if the payment dates are different.
  • More cards can lead to an increase in credit utilization. A high CUR can hurt your credit score.
  • Different cards offer different perks. With too few cards, you risk losing out on a variety of advantages.
  • On the flip side, having too many cards can make keeping track on payment due dates a struggle. It can lead to charges for late payments as well as a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits: Find cards that offer various benefits, including travel rewards, cashback or low-interest rates.
  2. Annual Fees It is important to make sure the card's benefits surpass any annual fees.
  3. Interest Rates: In order to get a low interest rate, it's crucial unless you're confident you'll pay off the debt every month.
  4. Credit Limit: A higher credit limit can improve your credit utilization ratio, if you don't exceed it.

Average Number Credit Cards Should I Have

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

Financial experts recommend having 3 to 5 credit card accounts to ensure an extensive credit profile. This allows for various benefits and helps with the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

A number of factors must be taken into consideration when deciding how many credit cards you will own. These include:

  • Credit score and past history Your credit scores and histories will affect how many credit cards you need. You could only qualify to apply for one or more credit cards if you have an unsatisfactory credit score or a short credit history.
  • The amount of your earnings and expenses will be important. If you've got a high income and low expenses, you could have more credit cards than someone with a lower income and higher expenses.
  • Priorities and goals for your financial life: The goals you have for your finances and the priorities can determine the number of credit cards you need to own. If you're looking to improve your credit score, or earn rewards, you should consider owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some recommended numbers of credit cards based around different scenarios:

  • For those who have no credit history If you are not able to establish credit, you could be eligible for one or two credit cards.
  • For those with a good credit score: If you have an average credit score, you could have between two and three credit cards.
  • For people with excellent credit scores: If you have excellent credit scores you could be the owner of four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have examined the number of credit cards you should have Let's see how applying multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards have a positive impact on your credit score, in a variety ways in which they include:

  • Improved credit utilization ratio: The use of multiple credit cards may assist in improving your CUR. It spreads your balances across several 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 may harm your credit score in these ways:

    • Increased risk of missing payments and delinquencies: Having many credit cards could result in the risk of having to miss payments. There is also a chance of becoming delinquent to your credit card accounts.
    • Increased credit inquiries and new accounts When you apply for multiple credit cards could lead to multiple credit inquiries as well as new accounts. Both of them could affect your credit score.
    • Lower average age of accounts The presence of multiple credit card accounts can help reduce the age average of your accounts. In turn, it can lower your credit score.
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