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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 field of personal finance is "How many credit accounts should I hold?" This question becomes particularly pertinent if you are considering the addition of tradelines to your credit report. Let's demystify this topic and provide you with the knowledge and guideline to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit and debit cards you have is not only a matter of personal convenience. It also affects the credit score. While you know that having a credit line can help your credit score, you're likely in a state of confusion about how many cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we look at the number of credit cards you're required to own, let's first look at the advantages and disadvantages associated with owning more than one credit card.

Advantages of Owning Multiple Credit Cards

  • If you own multiple credit cards the credit limit may be higher. A higher credit limit is ideal for emergencies and large purchases.
  • Use credit card rewards and cashback program to cut costs when you purchase things on a daily basis.
  • The ratio of your credit utilization will improve. Your credit utilization rate refers to the amount of available credit that you are currently using. Making use of a variety of credit cards could 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 go into debt.
  • It's easy to make unplanned purchases that you aren't able to afford when you're using a variety of credit cards.
  • It can be difficult to manage multiple credit card accounts. It will require the time and effort. More so if the payment schedules change.
  • A lot of cards can result in high levels of credit utilization. A high CUR can hurt your credit score.
  • Different cards come with different perks. If you have too many cards, you risk missing out on diverse benefits.
  • On the other hand the other hand, having too many cards can make keeping track on payment due dates a challenge. It can result to late fees and a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Differential Benefits: Look for cards with various perks, such as travel rewards, cashback or low-interest rates.
  2. Annual Fees: Make sure the card's advantages outweigh any annual costs.
  3. Interest Rates: Lower APRs are essential unless you're certain you'll pay off the balance every month.
  4. Credit Limit: A higher credit limit can help improve your credit utilization ratio if that you don't go over it.

Average Number Credit Cards Should I Have

After having looked at the pros and cons of owning multiple credit cards let's explore how many credit card you should have. What is too much? And how many are sufficient?

Financial experts suggest having 3 to 5 credit cards for a complete credit profile. This offers a variety of advantages and boosts the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

A variety of factors should be considered when deciding how many credit cards you will own. These include:

  • Credit score and history: Your credit scores and histories will affect the number of credit card you should have. You may only qualify to get one or two credit cards in the event that you have a low credit score or a weak credit history.
  • Budget and income: Your income and expenses can be crucial. If you've got a high income and relatively low expenses, then you can use more credit cards than someone with a lower income and higher expenses.
  • Priorities and goals for your financial life Your goals in terms of finances and priorities will also affect the number of credit card you can own. If you want to improve your credit score or earn rewards consider having a variety of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • for those with no credit history If you're without credit, could be eligible for one or two credit cards.
  • For those with a credit score of average If you have an average credit score, you might have between two and three credit cards.
  • For those with excellent credit scores: If you have excellent credit you may be able to hold four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've examined the number of credit cards you're required to 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 have a positive effect on your credit score in various ways including:

  • Better credit utilization ratio: The use of multiple credit cards may assist 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

Multiple credit cards may affect your credit score in these ways:

    • Increased risk of missing payments and delinquencies: Owning a lot of credit card accounts could lead to an increased chance of missing payments. Also, there is a chance of becoming delinquent with your account.
    • Increased credit inquiry and new accounts The application process for multiple credit cards can result in multiple credit queries and new accounts. Both of these could lower your credit score.
    • Lower average account age The use of multiple credit cards can reduce the average age of your accounts. In turn, it could lower your credit score.
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