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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 boggles people in personal finance is "How many credit accounts should I hold?" This question becomes crucial when you are considering the addition of tradelines to your credit profile. Let's take a look at this topic from a different angle to provide you with the necessary information and the path to take confident financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

Your number of credit cards is not just one of your personal choices for convenience. It also influences the credit score. While you're aware that an account with a credit card will improve your credit score, you're probably not sure how many cards you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we look at the number of credit card you should own, let's first look at the advantages and disadvantages of having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you've got several credit cards your credit limit could be higher. A higher credit limit can be helpful for emergency expenses or large purchases.
  • Make use of credit cards that have rewards and cashback plans to cut down on costs on items on a regular basis.
  • Your credit utilization ratio is likely to increase. Your credit utilization number refers to the percentage of your available credit that you currently use. 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 you more prone be tempted to overspend or go into debt.
  • It's easy to make impulsive expenditures that aren't feasible if you have multiple credit cards.
  • The management of multiple credit cards could take more time and effort. Particularly if the payment dates are different.
  • More cards could lead to excessive credit utilization. A high CUR could harm your credit score.
  • Different cards provide different perks. A lack of cards can mean being left out of many advantages.
  • On the other hand, having too many cards can make keeping track of due dates challenging. It could lead to the occurrence of late fees and damage to your credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits Look for cards that come with advantages, such as cashback, travel rewards, or low-interest rates.
  2. Annual Fees You must ensure the card's benefits far exceed the annual fee.
  3. Interest Rates In order to get a low interest rate, it's important unless you're confident that you'll repay the balance every month.
  4. Credit Limit: A higher credit limit can increase your credit utilization ratio, provided that you don't go over it.

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 own. What is too much, and how many are enough?

Financial experts suggest having 3 to 5 credit cards for an rounded credit profile. This allows for various advantages and also improves the credit utilization ratio.

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 to hold. These factors include:

  • History and credit score Your credit scores and histories will affect how many credit cards you need. You're only eligible to apply for one or more credit cards if you have a low credit score or a poor credit history.
  • Budget and income: Your income and expenses can be crucial. If you're blessed with a higher income and relatively low expenses, then you can be able to handle more credit card debt than someone with a lower income and more expenses.
  • Priorities and goals for your financial life Priorities and financial goals also determine how many credit card you need to own. If you're looking to boost your credit score or earn rewards consider owning a number 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 your credit score is not great, you could qualify for one or two credit cards.
  • For people having average credit scores If your credit score is average, you may have a range of two to three credit cards.
  • for those with high credit scores: If you have excellent credit scores you can have at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've discussed how many credit cards should you have We'll look at how applying multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit card accounts can be beneficial to your credit score in several ways in which they include:

  • Improved credit utilization ratio: Possessing multiple credit cards could aid in improving your CUR. It spreads out 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

Multiple credit cards may hurt your credit score in the following ways

    • Higher risk of late payments and delinquencies: Owning a lot of credit cards could result in a higher risk of missing payments. There is also the possibility of being in delinquency to your credit card accounts.
    • Increased credit inquiries and the opening of new accounts Credit card applications for multiple cards could generate multiple credit enquiries as well as new accounts. Both can lower your credit score.
    • Lower average account age Multiple credit card accounts can reduce the average age of your accounts. This can lower your credit score.
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