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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 biggest questions that people have when it comes to personal finance is "How numerous credit cards should I own?" This question becomes even more pertinent when you are considering the addition of trade lines to your credit profile. Let's decode this issue and provide you with the knowledge and a plan to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit cards you carry isn't just one of your personal choices for convenience. It also influences your credit score. Although you're aware that having credit cards can improve your credit score, you're likely confused about how many credit cards you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we look at the number of credit cards you're allowed to have First, let's take a look at the advantages and disadvantages when you have multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you've got multiple credit cards your credit limit will be higher. A credit limit that is high is advantageous for emergencies or large purchases.
  • Use credit cards that have rewards and cashback plans to cut down on costs when you buy things on a daily basis.
  • Your credit utilization ratio will improve. Your credit utilization percentage refers to the percentage of your available credit that you currently use. Credit cards with multiple accounts can increase your credit score through dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more prone to spend more than you can afford and then fall into debt.
  • It's easy to make unplanned purchases that you're not able to pay for when you're juggling multiple credit cards.
  • It can be difficult to manage multiple credit card accounts. It will require more time and effort. More so if the payment schedules differ.
  • More cards could lead to high credit utilization. A high CUR can negatively impact your credit score.
  • Different cards have different benefits. The lack of cards means losing out on a variety of advantages.
  • On the other hand having too many credit cards can make keeping track of payment due dates challenging. It can lead to penalties for late payments and a deterioration of credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diversity of Benefits: Find cards that offer various perks, such as cashback, travel rewards, or low-interest rates.
  2. Annual Fees: Be sure that the card's benefits surpass annual fees.
  3. Interest Rates A lower APR is essential unless you're certain that you'll pay the balance every month.
  4. Credit Limit: A higher credit limit can boost your credit utilization rate, if you don't overdraw it.

Average Number Credit Cards Should I Have

After looking at the pros and cons of having several credit cards, let's examine the number of credit cards you should own. How many credit card accounts is enough? How many are enough?

Financial experts recommend having 3 to 5 credit card accounts to ensure an extensive credit profile. This offers a variety of advantages and can improve the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

There are many factors to take into consideration when deciding on the number of credit cards to have. These factors include:

  • Credit score and past history Your credit history and score will dictate the number of credit cards you need. You are only eligible for one or two credit card if you have a low credit score or a weak credit history.
  • Spending and income: Your income and expenses can be vital. If you earn a high income and minimal expenses, you might have more credit cards than those with lower incomes and higher expenses.
  • Financial goals and priorities Your financial objectives and priorities will affect how many credit cards you should have. If you are looking to improve the score on your credit report or earn rewards you should consider having a variety of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For people who do not have credit history: If you do not have credit history, then you may be eligible for one or two credit cards.
  • For people who have average credit scores If you have an average credit score, you might have two to three credit cards.
  • For people with excellent 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 have looked at how many credit cards you should have let's consider how having multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Owning multiple credit cards can improve your credit score in many ways in which they include:

  • Better credit utilization ratio: Having multiple credit card accounts can help improve your CUR. It spreads 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

The fact that you have multiple credit cards can be detrimental to your credit score in these ways:

    • Greater risk of missing payments and delinquencies: Owning a lot of credit cards can lead to the possibility of more frequent missed payments. There's also a chance of becoming delinquent on your accounts.
    • Credit inquiries are increasing and so are new accounts Credit card applications for multiple cards could be the cause of multiple credit inquiry as well as new accounts. Both of them can affect your credit score.
    • Lower average account age Multiple credit card accounts can lower the age average of your accounts. This could lower your credit score.
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