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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


A question that is often asked by people in the realm of personal finance is "How many credit cards can I use?" This question becomes particularly pertinent if you are contemplating adding tradelines to your credit score. Let's demystify this topic, offering you the insight and roadmap to make confident financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit and debit cards you have is not just an issue of personal convenience. It also influences the credit score. Although you're aware that having credit cards can help your credit score, you're probably confused as to how many credit cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we dive into how many credit cards you're allowed to have before we look at the benefits and downsides of having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're using multiple credit cards and credit limits, they could be greater. A credit limit of high amount is advantageous for emergencies or large purchases.
  • Utilize credit cards with rewards or cashback rewards to save some money on things daily.
  • Your ratio of credit utilization is likely to increase. Your credit utilization ratio refers to the amount of available credit that you currently use. The use of multiple credit cards can boost your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards are a great way to increase the likelihood to spend too much and end up in debt.
  • It's easy for people to make unplanned purchases you can't afford when you have many credit cards.
  • managing multiple credit card accounts can require some time and energy. Even more so if payment dates are different.
  • The more cards you have can lead to very high utilization of credit. A high CUR could hurt your credit score.
  • Different cards have different benefits. Being too cautious with your cards can result in losing out on a variety of advantages.
  • On the other hand being a card holder with too many can make the process of keeping track of 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: Find cards that provide a variety of advantages, such as travel rewards, cashback or low-interest rates.
  2. Annual Fees Make sure the card's benefits outweigh any annual charges.
  3. Interest Rates: It is essential unless that you'll have enough money to pay off the balance every month.
  4. Credit Limit: A higher credit limit could improve your credit utilization ratio, as long as you don't reach the maximum limit.

Average Number Credit Cards Should I Have

Now that we have looked at the advantages and disadvantages of owning multiple credit cards, let's look at the number of credit card you should have. What is too much? And how many are sufficient?

Financial experts suggest having 3 to 5 credit cards for an overall credit profile. This gives you a variety of 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 on the number of credit cards to own. These include:

  • History and credit score Your credit score and history will determine how many credit cards you need. You may only qualify for one or two credit card if have an unsatisfactory credit score or have a poor credit record.
  • The amount you earn and the expenses you incur: Your income and expenses can be crucial. If you earn a great income and low expenses, you can be able to handle more credit card debt than someone with a lower income and higher expenses.
  • Financial goals and priorities Your financial objectives and priorities will also affect the number of credit card you should have. If you're looking to boost your credit rating, or earn rewards points, consider owning a number of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For people with no credit history: If you don't have a credit history, you might be eligible for one or two credit cards.
  • For people with a good credit score: If your credit score is average, you may be able to have three or more credit cards.
  • For those with excellent credit scores: If you have an excellent credit score you could have at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

After we've looked at how many credit cards you should own Let's look at 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 have a positive effect on your credit score through a variety of ways which include:

  • Improved credit utilization ratio: Having multiple credit card accounts can aid in improving 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

Owning multiple credit cards can be detrimental to your credit score in the following ways

    • Increased risk of missing payments and delinquencies: Owning a lot of credit cards can result in greater risk of missing payments. There is also a possibility of becoming indebted to your credit card accounts.
    • Credit inquiries are increasing and so are new accounts When you apply for multiple credit cards can result in multiple credit queries and new accounts. Both can negatively impact your credit score.
    • Lower average age of accounts The presence of multiple credit card accounts can help reduce the age average of your accounts. In turn, it could lower your credit score.
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