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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 their personal finances is "How many credit card should I get?" This question becomes more pertinent when you are contemplating adding tradelines to your credit profile. Let's dispel this nagging issue to provide you with the necessary information 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 comfort. It also influences your credit score. Although you're aware of the fact that having the right credit card can boost 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 dive into how many credit cards you're allowed to have before we look at the benefits and downsides of having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you have multiple credit cards your credit limit will be greater. A high credit limit is useful for emergencies or large purchases.
  • Make use of credit cards with rewards and cashback plans to cut down on costs on items on a regular basis.
  • Your credit utilization ratio will rise. The credit utilization ratio refers to the percentage of your credit available that you are currently using. Credit cards with multiple accounts can boost your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards are a great way to increase the likelihood to overspend and get into debt.
  • It's easy to make impulse purchases that you're not able to pay for when you're carrying a number of credit cards.
  • It can be difficult to manage multiple credit card accounts. It will require considerable time and effort. More so if the payment timings differ.
  • More cards could lead to very high utilization of credit. A high CUR can hurt your credit score.
  • Different cards have different benefits. With too few cards, you risk not gaining the many advantages.
  • On the other hand having too many accounts can make keeping track of payments due dates challenging. 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 perks, such as travel rewards, cashback, or low-interest rates.
  2. Annual Fees Make sure the card's benefits outweigh annual fees.
  3. Interest Rates: An APR that is low is vital unless that you'll be able to pay off the balance each month.
  4. Credit Limit: A higher credit limit could improve your credit utilization ratio as long as you don't use it to the max.

Average Number Credit Cards Should I Have

After looking at the benefits and disadvantages of owning several credit cards, let's examine the number of credit cards you should own. How many credit cards is enough? And how many are sufficient?

Financial experts recommend having 3 to 5 credit card accounts to ensure a balanced credit profile. This gives you a variety of benefits and can also help with the credit utilization ratio.

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:

  • History and credit score The credit score you have and your history will decide how many credit cards to get. You may only qualify only for one or two credit accounts if you have poor credit scores or a limited credit history.
  • Earnings and expenses: Your earnings and expenses will be important. If you have an excellent income and minimal expenses, you might use more credit cards than those with lower incomes and higher expenses.
  • Priorities and goals for your financial life Your financial objectives and priorities also determine the number of credit cards you should have. If you want to improve your credit score or earn rewards think about having a variety of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For those with no credit history If you're without credit, could qualify for one or two credit cards.
  • For those with average credit scores If you have an average credit score you may have a range of two to three credit cards.
  • for those with high credit scores: If you have an excellent credit score you could have at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have examined how many credit cards to get, let's explore how applying multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards improve your credit score through a variety of ways and include:

  • A higher credit utilization ratio Possessing multiple credit card accounts can aid in improving your CUR. It spreads out 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

The fact that you have multiple credit cards can harm your credit score in the following ways

    • Greater risk of not paying and delinquencies credit cards can create an increased risk of avoiding payments. There is also the chance of becoming delinquent with your account.
    • Increased credit inquiry and new accounts Application for multiple credit cards could produce multiple credit requests and new accounts. Both can impact your credit score.
    • Lower average age of accounts: Owning multiple credit cards can help lower the age average of your accounts. In turn, it can affect your credit score.
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