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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 question that boggles people in the realm of personal finance is "How many credit accounts should I hold?" This question becomes even more pertinent when you are considering the addition of trade lines to your credit profile. Let's take a look at this topic from a different angle by providing you with the information and roadmap to make confident financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit or debit cards you use isn't just the result of personal convenience. It also affects your credit score. While you're aware that the right credit card can boost your credit score, you're likely puzzled as to how many you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we get into the details of the number of credit cards you need to have we'll first examine the advantages and disadvantages of owning multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you've got several credit cards your credit limit might be higher. A high credit limit is great for emergency expenses or large purchases.
  • Use credit cards with rewards and cashback offers to save you money when you purchase things daily.
  • Your ratio of credit utilization will rise. Your credit utilization rate refers to the percentage of your available credit that you are currently using. Credit cards that are used in multiple ways can increase your credit score through splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards are a great way to increase the likelihood to overspend and enter debt.
  • It's not difficult to make unexpected expenses that you're unable to afford if there are a lot of credit card accounts.
  • Making multiple payments with credit cards can require much time and effort. Particularly if the pay times are different.
  • More credit cards can lead to very high utilization of credit. A high CUR could harm your credit score.
  • Different cards offer different perks. The lack of cards means being deprived of many advantages.
  • On the other hand it is possible that having too many cards can make keeping track of payment due dates challenging. It could lead to charges for late payments as well as a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits Find cards that offer benefits, including cashback, travel rewards, or low-interest rates.
  2. Annual Fees Make sure the card's advantages outweigh the annual fee.
  3. Interest Rates It is essential unless you're certain that you'll pay the balance each month.
  4. Credit Limit: A higher credit limit can increase your credit utilization ratio, provided you don't overdraw it.

Average Number Credit Cards Should I Have

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

Financial experts recommend having 3 to 5 credit cards to have a complete credit profile. This gives you many advantages and can improve the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

A number of factors must be taken into consideration when deciding how many credit card accounts to own. These factors include:

  • Credit score and past history Your credit scores and histories will affect the number of credit card you should have. You're only eligible to get one or two credit cards in the event that you have poor credit scores or have a poor credit record.
  • The amount you earn and the expenses you incur: Your expenses and income will also be vital. If you have a high income and very low expenses, it is possible to be able to handle more credit card debt than someone with a lower income and more expenses.
  • Priorities and goals for your financial life Your goals in terms of finances and priorities also determine how many credit card you should own. If you're hoping to improve your credit score, or earn rewards, you should consider owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

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

How Owning Multiple Credit Cards Affects Your Credit Score

After we've examined how many credit cards you're required to have Let's look at how using multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards positively impact your credit score, in a variety ways such as:

  • Improved credit utilization ratio: The use of multiple credit cards may aid in improving your CUR. It spreads out 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

Having multiple credit card accounts can be detrimental to your credit score in the following ways

    • Risk of missed payments and delinquencies: Having many credit cards can increase an increased risk of avoiding payments. Also, there is a chance of being in delinquency to your credit card accounts.
    • Increased credit inquiries and the opening of new accounts: Applying for multiple credit cards could result in multiple credit queries as well as new accounts. Both of these can affect your credit score.
    • Lower average age of accounts The fact that you have multiple credit cards can help lower the average age of your accounts. In turn, it could lower your credit score.
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