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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 most frequently asked questions with regard to their finances is "How many credit cards should I have?" This question becomes more important when you are contemplating adding trade lines to your credit profile. Let's demystify this topic by providing you with the information and guideline to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit card you use is not just an issue of personal choice. It also influences the credit score. While you're aware that a credit card can improve your credit score, you're likely puzzled as to how many you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we dive into how many credit cards you're required to own Let's first consider the benefits and downsides of owning a variety of credit cards.

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 card rewards and cashback program to cut costs when you buy things daily.
  • The ratio of your credit utilization will increase. Your credit utilization number refers to the percentage of your credit available that you are currently using. Using many 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 simple to make unplanned purchases that aren't financially feasible when you're juggling multiple credit cards.
  • Controlling multiple credit cards can require an amount of time and effort. It is even more difficult if the payment times are different.
  • The addition of more cards can result in a high rate of utilization. A high CUR can harm your credit score.
  • Different cards provide different perks. Too many cards could mean not gaining the many benefits.
  • On the flip side having too many credit cards can make managing payment due dates difficult. It can result in charges for late payments as well as a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Variety of Benefits: Look for cards that come with benefits, including travel rewards, cashback or low-interest rates.
  2. Annual Fees Make sure the card's benefits exceed annual fees.
  3. Interest Rates An APR that is low is essential unless you're certain that you'll have enough money to pay off the balance every month.
  4. Credit Limit: A higher credit limit can boost your credit utilization rate, if that you don't go over 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 you should have. How many credit cards is too much, and how many are sufficient?

Financial experts suggest having 3 to 5 credit card accounts to ensure a well-rounded credit profile. This gives you a variety of benefits and helps improve the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

Many factors should be considered when deciding how many credit card accounts to own. These factors include:

  • Credit score and history: Your credit score and past history determine the number of credit cards you are eligible for. It is possible to only qualify for credit cards with one or two points if you have low credit scores or a limited credit history.
  • In addition to your expenses, your income and expenses will also be important. If you've got a high income and low expenses, you may handle more credit cards than someone with a lower income and higher expenses.
  • Financial goals and priorities: Priorities and financial goals will influence the number of credit-cards you need to own. If you're looking at improving your credit score, or earn rewards, you should consider having several 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 people with no credit history If you are not able to establish credit, you might be eligible for one or two credit cards.
  • For people with credit scores that are average: If you're averaging credit score you may have two to three credit cards.
  • For people with excellent credit scores: If you have an excellent credit score you could be the owner of at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have discussed how many credit cards you should have let's examine how applying 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 have a positive effect on your credit score in different ways for example:

  • Increased credit utilization ratio: Having multiple credit cards could assist in improving your CUR. The spreads 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

Owning multiple credit cards can damage your credit score the following ways:

    • Greater risk of not paying and delinquencies: Having many credit cards could result in greater risk of missing payments. There is also the risk of being in delinquency to your credit card accounts.
    • Increased credit inquiry and new accounts If you apply for several credit cards could produce multiple credit requests and new accounts. Both of them can affect your credit score.
    • Lower average age of accounts The presence of multiple credit card accounts can help reduce the average age of your accounts. In turn, it can lower your credit score.
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