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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 most enigmatizing questions for people in their personal finances is "How many credit accounts should I hold?" This question becomes much more relevant when you are contemplating adding trade lines to your credit profile. Let's clarify this issue giving you 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 is not only an issue of personal convenience. It also influences your credit score. While you know that having credit cards can help your credit score, you're likely confused as to how many credit cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we discuss the number of credit cards you need to have let's look at the advantages and disadvantages of owning multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you own multiple credit cards, your credit limit can be higher. A credit limit of high amount is beneficial for emergency expenses or large purchases.
  • Use credit cards that have rewards and cashback program to cut costs on items on a regular basis.
  • Your credit utilization ratio is likely to increase. Your credit utilization ratio refers to the percentage of your credit available that you currently use. Credit cards that are used in multiple ways can boost your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards are a great way to increase the likelihood be tempted to overspend or go into debt.
  • It's easy and convenient to make purchase that you cannot afford if there are a lot of credit card accounts.
  • It can be difficult to manage multiple credit card accounts. It will require an amount of time and effort. Particularly if the payment times are different.
  • In addition, more cards could result in higher credit utilization. A high CUR can impact your credit score.
  • Different cards come with different perks. A lack of cards can mean not getting all the benefits.
  • On the flip side having too many cards can make keeping track of payments due dates challenging. This can result in the occurrence of late fees and damage to your credit score.

Key Points to Consider When Applying for Credit Cards

  1. Different Benefits: Look for cards that provide various benefits, including cashback, travel rewards, or low-interest rates.
  2. Annual Fees: It is important to make sure the card's benefits are greater than any annual charges.
  3. Interest Rates: It is vital unless that you'll finish the balance every month.
  4. Credit Limit: A higher credit limit can boost your credit utilization ratio, as long as you don't max it out.

Average Number Credit Cards Should I Have

After looking at the pros and cons of owning multiple credit card accounts, let's see how many credit card you should have. What is too many, and how many are sufficient?

Financial experts suggest having between 3 and five credit cards for a complete credit profile. This gives you many benefits and helps improve the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

Numerous factors should be taken into account when deciding how many credit cards to own. These factors include:

  • History and credit score Your credit score as well as your past experience will determine how many credit cards you'll need. You could only qualify for credit cards with one or two points if have an unsatisfactory credit score or a credit history that is not as good.
  • Earnings and expenses: Your expenses and income will also be important. If you have a high income and minimal expenses, you might use more credit cards than those with lower incomes and higher expenses.
  • Priorities and financial goals: Your financial goals and priorities can determine how many credit card you should have. If you want to improve your credit score and earn rewards, think about owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some recommended numbers of credit cards that are based on a variety of scenarios:

  • for those with no credit history: If you're not creditworthy, you might qualify for one or two credit cards.
  • For those with credit scores that are average: If you're averaging credit score you may have up to three credit cards.
  • For people with outstanding credit scores: If you have excellent credit, you may hold at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have discussed how many credit cards you should have let's consider how having multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Possessing multiple credit cards may positively impact your credit score in different ways in which they include:

  • Increased credit utilization ratio Multiple credit cards can assist in improving your CUR. The spreads your balances among 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

A number of credit cards on your account can hurt your credit score in the following ways

    • Higher risk of missed payments and delinquencies: Owning a lot of credit cards can lead to the possibility of more frequent missed payments. There is also the chance of being in delinquency on your accounts.
    • Increased credit inquiry and new accounts The application process for multiple credit cards can create multiple credit inquires as well as new accounts. Both of them can affect your credit score.
    • Lower average age of accounts The fact that you have multiple credit cards can lower the average age of your accounts. This can lower your credit score.
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