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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 when it comes to personal finance is "How many credit cards can I use?" This question becomes more pertinent when you are contemplating adding tradelines to your credit score. Let's demystify this topic to provide you with the necessary information and the path to take confident 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 affects the credit score. While you're aware that a credit card can improve your credit score, you're likely confused about the number you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we go into how many credit cards you're required to own Let's first consider the benefits and downsides of having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you are a holder of multiple credit cards, your credit limit can be higher. A higher credit limit can be great for emergency expenses or large purchases.
  • Make use of credit cards with rewards and cashback schemes to save when you buy things on a daily basis.
  • Your credit utilization ratio is likely to increase. The credit utilization ratio refers to the amount of credit available that you are currently using. Utilizing multiple credit cards may improve your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make it more likely to spend more than you can afford and then fall into debt.
  • It's easy and convenient to make purchases that you're not able to pay for when you have a lot of credit cards.
  • Managing multiple credit cards can require an amount of time and effort. Particularly if your payment schedules change.
  • More cards can lead to the utilization of credit to be high. A high CUR can impact your credit score.
  • Different cards come with different perks. A lack of cards can mean you aren't getting the full advantages.
  • On the other hand being a card holder with too many can make the process of keeping track of due dates difficult. This can result in unpaid fees and a degraded credit score.

Key Points to Consider When Applying for Credit Cards

  1. Differential Benefits: Look for cards that have benefits, including cashback, travel rewards, or low-interest rates.
  2. Annual Fees: Check to ensure that the card's benefits exceed any annual charges.
  3. Interest Rates: A low APR is essential unless that you'll pay the balance each month.
  4. Credit Limit: A higher credit limit can benefit your credit utilization ratio if that you don't max it out.

Average Number Credit Cards Should I Have

Now that we have looked at the pros and cons of having multiple credit cards, let's look at the number of credit cards should you have. How many credit cards are too many, and how many are sufficient?

Financial experts suggest having 3 to five credit cards to create an rounded credit profile. This can provide a variety of advantages and improves 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 on the number of credit cards you will own. These include:

  • Credit score and history: Your credit score and record will help determine the number of credit cards you should own. You're only eligible for one or two credit cards if you have a low credit score or a poor credit history.
  • In addition to your expenses, your income and expenses will also be vital. If you've got a high income and low expenses, you could handle more credit cards than those with lower incomes and higher expenses.
  • Priorities and goals for your financial life: Your goals in terms of finances and priorities can influence the number of credit cards you can own. If you're trying to improve your credit rating, or earn rewards points, think about 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 may be eligible for one or two credit cards.
  • For those with a credit score of average If you're averaging credit score, you could have a couple of credit cards.
  • For people 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 you're supposed to have let's examine how applying multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit card accounts can affect your credit score by a variety ways which include:

  • Better credit utilization ratio: Having multiple credit card accounts can assist in improving your CUR. It 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

Multiple credit cards may hurt your credit score in these ways:

    • Higher risk of missed payments and delinquencies: Owning a lot of credit cards can increase an increased risk of not making payments. There is also a possibility of becoming indebted to your credit card accounts.
    • Increased credit inquiry and new accounts Inquiring for multiple credit cards could cause multiple credit inquiries as well as new accounts. Both of these can affect your credit score.
    • Lower average age of accounts The presence of multiple credit card accounts can lower the average age of your accounts. As a result, it could affect your credit score.
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