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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 with regard to their finances is "How how many credit-cards should I carry?" This question becomes more pertinent when you are considering the addition of tradelines to your credit report. Let's decode this issue by providing you with the information and guidelines to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit cards you have is not only an issue of personal preference. It also influences the credit score. While you're aware that credit cards can improve your credit score, you're likely not sure how many cards you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we get into the details of the number of credit cards you should own We'll first discuss the advantages and disadvantages that come with having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you have multiple credit cards your credit limit will be higher. A higher credit limit can be useful for emergencies or large purchases.
  • Use credit cards with rewards or cashback programs to reduce your expenses when you purchase things on a daily basis.
  • The ratio of your credit utilization will increase. The credit utilization ratio relates to the percentage of your credit available that you are currently using. Utilizing multiple credit cards can improve your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make it more likely be tempted to overspend or go into debt.
  • It's easy to make impulsive purchases that you're not able to pay for when you have several credit cards.
  • Making multiple payments with credit cards can require long and time. More so if the payment schedules vary.
  • The addition of more cards can result in high levels of credit utilization. A high CUR could hurt your credit score.
  • Different cards provide different perks. Insufficient cards mean not gaining the many advantages.
  • On the other hand having too many accounts can make managing payment due dates a struggle. It can result to charges for late payments as well as a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits Find cards that provide various benefits, including travel rewards, cashback, or low-interest rates.
  2. Annual Fees You must ensure the card's rewards outweigh any annual costs.
  3. Interest Rates: A low APR is crucial unless you're confident you'll pay off the balance every month.
  4. Credit Limit: A higher credit limit can improve your credit utilization rate, if you don't overdraw it.

Average Number Credit Cards Should I Have

After having looked at the benefits and disadvantages of owning multiple credit cards, let's look at how many credit cards you should own. How many credit cards are too much, and how many are enough?

Financial experts recommend having 3 to five credit cards to create an extensive credit profile. This allows for various benefits and helps with 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 one should have. These include:

  • Credit score and past history Your credit scores and histories will affect how many credit cards you should own. You're only eligible for one or two credit cards if you have a low credit score or a short credit history.
  • The amount of your expenses and income will also be vital. If you have a good income and low expenses, you can have more credit card accounts than someone with a lower income and more expenses.
  • Financial goals and priorities: Priorities and financial goals will also determine the number of credit cards you should own. If you're hoping to improve the score on your credit report or earn rewards think about owning a number of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For those with no credit history: If there is no credit history for you, you may be eligible for one or two credit cards.
  • For those with average credit scores: If your credit score is average, then you could have two to three credit cards.
  • for those with high credit scores: If you have excellent credit, you may own four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've discussed how many credit cards you need we can look into how using multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

The fact that you have multiple credit cards can be beneficial to your credit score in a variety of ways for example:

  • Increased credit utilization ratio: Possessing multiple credit card accounts can 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

Multiple credit cards may negatively impact your credit score the following ways:

    • Higher risk of missed payments and delinquencies: Having many credit cards can create greater risk of missing payments. There is also a risk of being in delinquency with your account.
    • More credit inquiries and new accounts Application for multiple credit cards can lead to multiple credit inquiries and new accounts. Both of these could lower your credit score.
    • Lower average age of your account Multiple credit cards can help reduce the average age of your accounts. As a result, it could affect your credit score.
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