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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 in the realm of personal finance is "How many credit cards can I use?" This question becomes crucial when you are thinking about adding tradelines to your credit report. Let's take a look at this topic from a different angle, offering you the insight and guideline to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

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

The Pros and Cons of Owning Multiple Credit Cards

Before we begin to discuss how many credit cards you should own We'll first discuss the benefits and downsides of having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you have multiple credit cards the credit limit may be higher. A higher credit limit can be great for emergency expenses or large purchases.
  • Use credit cards that have rewards as well as cashback to save when you purchase things daily.
  • Your ratio of credit utilization will rise. Your credit utilization percentage refers to the percentage of your credit available that you currently use. Credit cards that are used in multiple ways can improve your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards are a great way to increase the likelihood to spend more than you can afford and then fall into debt.
  • It's easy to make unplanned purchases that you aren't able to afford when you're juggling multiple credit cards.
  • Controlling multiple credit cards can require considerable time and effort. More so if the payment timings differ.
  • The more cards you have can lead to higher credit utilization. A high CUR can negatively impact your credit score.
  • Different cards have different benefits. A lack of cards can mean not gaining the many benefits.
  • On the other hand having too many accounts can make keeping track of payments due dates challenging. It can result to penalties for late payments and a deterioration of credit score.

Key Points to Consider When Applying for Credit Cards

  1. Different Benefits: Find cards that provide a variety of perks, such as travel rewards, cashback, or low-interest rates.
  2. Annual Fees: It is important to make sure the card's benefits surpass any annual costs.
  3. Interest Rates: It is essential unless you're certain that you'll be able to pay off the balance every month.
  4. Credit Limit: A higher credit limit can improve 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 advantages and disadvantages to owning multiple credit card accounts, let's take a look at the number of credit cards you should own. How many credit cards are too many, and how many are sufficient?

Financial experts suggest having between 3 and 5 credit cards for a complete credit profile. This provides a range of advantages and can improve the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

There are a variety of factors to consider when deciding how many credit cards to have. These factors include:

  • History and credit score: Your credit score and record will help determine how many credit cards you need. You can only be eligible for one or two credit card if you have an unsatisfactory credit score or a poor credit history.
  • Spending and income: Your earnings and expenses will be crucial. If you have a substantial income and very low expenses, it is possible to have more credit cards than those with lower incomes and higher expenses.
  • Financial goals and priorities Your goals in terms of finances and priorities will also affect the number of credit card you should have. If you're looking at improving your credit rating, or earn rewards points, you should consider owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For those who have no credit history: If there is no credit history for you, you could qualify for one or two credit cards.
  • For those with credit scores that are average: If you have an average credit score, then you could have a couple of credit cards.
  • For people with excellent credit scores: If you have excellent credit scores you may be able to hold 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 need Let's see how applying multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Possessing multiple credit cards may be beneficial to your credit score in a variety of ways such as:

  • A higher credit utilization ratio Having multiple credit cards could help improve your CUR. The 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

Owning multiple credit cards can be detrimental to your credit score in these ways:

    • Higher risk of missing payments and delinquencies: Having many credit cards can result in an increased chance of missing payments. There's also a chance of becoming delinquent with your account.
    • Increased credit inquiries and the opening of new accounts Credit card applications for multiple cards could result in multiple credit inquiries as well as new accounts. Both can lower your credit score.
    • Lower average account age Possessing multiple credit cards can reduce the average age of your accounts. In turn, it could affect your credit score.
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