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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 issues that confuse people in personal finance is "How many credit card should I get?" This question becomes crucial when you are considering the addition of tradelines to your credit score. Let's decode this issue to provide you with the necessary information and direction to make sound financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit-cards you carry isn't just an issue of personal convenience. It also affects your credit score. Although you're aware 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 get into the details of how many credit cards you're supposed to have let's look at the advantages and disadvantages of owning a variety of credit cards.

Advantages of Owning Multiple Credit Cards

  • If you've got several credit cards and credit limits, they could be greater. A higher credit limit is handy for emergencies or large purchases.
  • Use credit cards that reward you as well as cashback to save when you buy things daily.
  • Your ratio of credit utilization will improve. Your credit utilization percentage refers to the amount of credit available that you are currently using. Credit cards with multiple accounts can improve your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make it more likely to overspend, and eventually fall into debt.
  • It's easy and convenient to make purchases that aren't financially feasible when you're carrying a number of credit cards.
  • managing multiple credit cards may require more time and effort. Particularly if the payment schedules vary.
  • More cards can lead to high credit utilization. A high CUR could affect your credit score.
  • Different cards have different benefits. A lack of cards can mean you aren't getting the full advantages.
  • On the flip side, having too many cards can make the task of calculating payment due dates a challenge. It can lead to overdue fees and damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Different Benefits: Find cards that offer various advantages, such as cashback, travel rewards, or low-interest rates.
  2. Annual Fees: Check to ensure that the card's benefits outweigh any annual costs.
  3. Interest Rates: Low APRs are essential unless you're certain that you'll finish the balance every month.
  4. Credit Limit: A higher credit limit can benefit your credit utilization rate, if you don't overdraw it.

Average Number Credit Cards Should I Have

After looking at the pros and cons of using multiple credit cards, let's discuss the number of credit cards should you have. How many credit cards are too many, and how many are sufficient?

Financial experts suggest having between 3 and five credit cards to ensure a balanced credit profile. This gives you a variety of advantages and can improve the ratio of credit utilization.

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 have. These include:

  • Credit score and past history: Your credit score and history will determine the number of credit cards to get. You'll only be able to qualify for a couple of credit cards, if you have poor credit scores or a credit history that is not as good.
  • Income and expenses: Your income and expenses can be crucial. If you're blessed with a higher income and little expenses, you are able to manage more credit cards than those with lower incomes and more expenses.
  • Priorities and goals for your financial life: The goals you have for your finances and the priorities will determine how many credit cards you can own. If you want to improve the score on your credit report or earn rewards think about owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some recommended numbers of credit cards that are based on a variety of 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're averaging credit score, it is possible to have a range of two to three credit cards.
  • For those with excellent credit scores: If you have an excellent credit score you may be able to hold at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have examined how many 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

Multiple credit cards positively impact your credit score in several ways in which they include:

  • Improved credit utilization ratio: Having multiple credit cards could help improve your CUR. The spreads your balances across 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

Owning multiple credit cards can hurt your credit score in the following ways:

    • Increased risk of missing payments and delinquencies: Owning a lot of credit card accounts can mean the risk of having to miss payments. There is also a risk of becoming indebted on your accounts.
    • More credit inquiries and new accounts Application for multiple credit cards could cause multiple credit inquiries and new accounts. Both can impact your credit score.
    • Lower average age of accounts Multiple credit cards can lower the average age of your accounts. This could lower your credit score.
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