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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


A question that is often asked by people in the realm of personal finance is "How many credit card should I get?" This question becomes particularly pertinent if you are considering the addition of tradelines to your credit profile. Let's decode this issue and provide you with the understanding and guideline to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

Your number of credit cards isn't just an issue of personal choice. It also influences your 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 go into the number of credit card you should own we'll first examine the benefits and downsides of having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you've got multiple credit cards your credit limit will be greater. A higher credit limit can be great for emergency expenses or large purchases.
  • Make use of credit cards with rewards as well as cashback to save when you buy things daily.
  • The ratio of your credit utilization is likely to increase. Your credit utilization rate refers to the amount of available credit 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 increase your chances to overspend and go into debt.
  • It's easy and convenient to make purchases that aren't financially feasible when you have many credit cards.
  • managing multiple credit cards may take some time and energy. More so if the payment times are different.
  • A lot of cards can result in high levels of credit utilization. A high CUR could hurt your credit score.
  • Different cards offer different perks. Having too few cards means you aren't getting the full advantages.
  • On the flip side it is possible that having too many cards can make managing payment due dates a struggle. This can result in unpaid fees and a degraded credit score.

Key Points to Consider When Applying for Credit Cards

  1. Variety of Benefits: Find cards that provide various benefits, including travel rewards, cashback, or low-interest rates.
  2. Annual Fees: Check to ensure that the card's benefits surpass the annual fee.
  3. Interest Rates In order to get a low interest rate, it's vital unless that you'll be able to pay off the balance each month.
  4. Credit Limit: A higher credit limit can boost your credit utilization ratio, as long as you don't max it out.

Average Number Credit Cards Should I Have

Now that we've looked at the pros and cons of using multiple credit cards, let's look at how many credit cards you should have. How many credit card accounts is enough? And how many are sufficient?

Financial experts suggest having 3 to five credit cards to ensure a well-rounded credit profile. This allows for various advantages and boosts the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

Many factors need to be considered when deciding on the number of credit cards to have. These factors include:

  • Credit score and history: Your credit scores and histories will affect the number of credit cards you should own. You could only qualify for one or two credit card if you have an unsatisfactory credit score or a weak credit history.
  • The amount of your earnings and expenses will be crucial. If you're blessed with a higher income and low expenses, you could handle more credit cards than those with lower incomes and higher expenses.
  • Priorities and financial goals: Your financial goals and priorities will influence the number of credit-cards you should possess. If you're hoping to improve your credit rating or earn rewards, think about having a variety of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For those who have no credit history If you're without credit, may qualify for one or two credit cards.
  • For those who have average credit scores If you have an average credit score, you may be able to have three or more credit cards.
  • for those with high credit scores: If you have excellent credit, you may hold four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

After we've examined how many credit card 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

Multiple credit cards could have a positive effect on your credit score in many ways including:

  • Increased credit utilization ratio: Having multiple credit cards could help improve your CUR. It spreads out 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 impact your credit score the following ways:

    • Higher risk of missing payments and delinquencies credit cards can increase an increased chance of missing payments. There is also a possibility of being in delinquency on your accounts.
    • More credit inquiries and new accounts Application for multiple credit cards can be the cause of multiple credit inquiry and new accounts. Both of them could affect your credit score.
    • Lower average age of accounts Multiple credit cards can lower the average age of your accounts. As a result, it can affect your credit score.
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