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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 frequently asked questions in the realm of personal finance is "How much credit card do I require?" This question becomes more important when you are contemplating adding tradelines to your credit report. Let's demystify this topic to provide you with the necessary information and guideline to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit card you use is not only one of your personal choices for convenience. It also affects the credit score. Although you're aware that having a credit line can help 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 get into how many credit cards you need to have We'll first discuss the advantages and disadvantages of owning multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're a credit card holder with multiple cards your credit limit will be higher. A high credit limit is ideal for emergencies and large purchases.
  • Utilize credit cards that offer rewards as well as cashback to save when you buy things daily.
  • Your ratio of credit utilization is likely to increase. The credit utilization ratio refers to the percentage of your available credit that you are currently using. Credit cards with multiple accounts can improve your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more likely to overspend and enter debt.
  • It's not difficult to make unexpected purchases that you're not able to pay for when you have many credit cards.
  • managing multiple credit cards may take the time and effort. It is even more difficult if the payment timetables change.
  • A lot of cards can result in higher credit utilization. A high CUR can negatively impact your credit score.
  • Different cards have different benefits. Too many cards could mean being left out of many benefits.
  • On the flip side the other hand, having a lot of cards can make keeping track of payments due dates difficult. It can result in charges for late payments as well as a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Variety of Benefits: Look for cards that have various perks, such as travel rewards, cashback or low-interest rates.
  2. Annual Fees Be sure that the card's advantages outweigh any annual fees.
  3. Interest Rates: In order to get a low interest rate, it's essential unless you'll pay off the balance each month.
  4. Credit Limit: A higher credit limit can boost your credit utilization ratio, provided you don't max it out.

Average Number Credit Cards Should I Have

Now that we have looked at the pros and cons of using multiple credit cards let's explore how many credit cards you should own. What is excessive, and how many are sufficient?

Financial experts recommend having between 3 and 5 credit cards to have a well-rounded credit history. This will provide many benefits and helps with the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

Several factors must be considered when deciding on the number of credit cards to own. These include:

  • Credit score and past history Your credit score and record will help determine the number of credit cards you should own. You could only qualify on one or two credit lines if you have poor credit scores or a poor credit history.
  • Earnings and expenses: Your income and expenses can be vital. If you have a high income and low expenses, you could take on more credit cards than someone with a lower income and higher expenses.
  • Priorities and goals for your financial life: Your financial goals and priorities also determine how many credit cards you should own. If you want to improve your credit score and earn rewards, think about having several credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For people with no credit history: If there is no credit history for you, you may 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 two to three credit cards.
  • For those with excellent credit scores: If you have excellent credit scores you may 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 should you have let's consider how having multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards could affect your credit score by a variety ways that include:

  • Better credit utilization ratio: Owning multiple credit cards can assist in improving your CUR. The spreads your balances over 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

Possessing multiple credit cards can cause damage to your credit score these ways:

    • Increased risk of missing payments and delinquencies: Owning a lot of credit cards can result in an increased risk of avoiding payments. There is also a risk of becoming delinquent on your accounts.
    • Increased credit inquiry and new accounts The application process for multiple credit cards can cause multiple credit inquiries and new accounts. Both can negatively impact your credit score.
    • Lower average age of accounts The presence of multiple credit card accounts can reduce the age average of your accounts. In turn, it could lower your credit score.
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