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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 when it comes to personal finance is "How many credit cards can I use?" This question becomes even more pertinent when you are contemplating adding tradelines to your credit profile. Let's take a look at this topic from a different angle giving you the knowledge and direction to make sound 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 comfort. It also affects the credit score. Although you're aware of the fact that having a credit card can improve your credit score, you're likely in a state of confusion about how many cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we dive into the number of credit cards you're allowed to have let's look at the advantages and disadvantages associated with owning more than one credit card.

Advantages of Owning Multiple Credit Cards

  • If you own multiple credit cards and credit limits, they could be higher. A credit limit of high amount is ideal for emergencies or large purchases.
  • Utilize credit cards with rewards and cashback schemes to save on things on a daily basis.
  • Your credit utilization ratio will rise. Your credit utilization ratio refers to the amount of available credit that you are currently using. Utilizing multiple credit cards may increase your credit score through dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can increase your chances to overspend and go into debt.
  • It's not difficult to make unexpected purchases you can't afford when you have a lot of credit cards.
  • Making multiple payments with credit cards can take much time and effort. Particularly if the pay schedules vary.
  • A lot of cards can result in the utilization of credit to be high. A high CUR can affect your credit score.
  • Different cards provide different perks. Insufficient cards mean missing out on many benefits.
  • On the flip side, having too many cards can make keeping track of payments due dates difficult. It can result to problems with late fees and a lower credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits: Find cards that offer advantages, such as cashback, travel rewards, or low-interest rates.
  2. Annual Fees: Make sure the card's rewards outweigh any annual fees.
  3. Interest Rates Lower APRs are essential unless you'll pay off the balance each month.
  4. Credit Limit: A higher credit limit can help your credit utilization ratio, provided you don't reach the maximum limit.

Average Number Credit Cards Should I Have

Now that we've looked at the advantages and disadvantages of owning multiple credit cards, let's discuss the number of credit cards you should be carrying. How many credit cards is enough? How many are enough?

Financial experts recommend having between 3 and 5 credit card accounts to ensure an rounded credit profile. This can offer a variety advantages and improves the ratio of credit utilization.

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 to keep. These factors include:

  • History and credit score: Your credit score and past history determine the number of credit cards you should own. It is possible to only qualify for one or two credit cards if you have poor credit scores or a credit history that is not as good.
  • Budget and income: Your income and expenses can be vital. If you have a good income and low expenses, you can manage 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 need to own. 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 based on different scenarios:

  • For people with no credit history: If there is no credit history for you, you might qualify for one or two credit cards.
  • For people who have average credit scores If you have an average credit score, then you could have two to three credit cards.
  • For people with excellent credit scores: If you have excellent credit you can have at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've examined how many credit cards should you have Let's look at how using multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Owning multiple credit cards can be beneficial to your credit score through a variety of ways that include:

  • Better credit utilization ratio: Multiple credit cards can aid in improving your CUR. It spreads out your balances across several 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 cause damage to your credit score the following ways

    • Higher risk of missed payments and delinquencies credit cards may result in the possibility of more frequent missed payments. There is also the chance of becoming indebted on your accounts.
    • Credit inquiries are increasing and so are new accounts Affiliation to multiple credit cards could be the cause of multiple credit inquiry and new accounts. Both can lower your credit score.
    • Lower average age of accounts: Owning multiple credit cards can help lower the average age of your accounts. As a result, it could lower your credit score.
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