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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 field of personal finance is "How many credit accounts should I hold?" This question becomes particularly pertinent if you are thinking about adding tradelines to your credit report. Let's break down this subject giving you the knowledge and guidelines to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit cards you carry isn't just something that you can do for personal convenience. It also influences the credit score. Although you're aware that having credit cards can improve your credit score, you're probably confused as to how many credit cards you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we get into the details of the number of credit cards you're supposed to have Let's first consider the advantages and disadvantages associated with owning more than one credit card.

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 advantageous for emergencies or large purchases.
  • Use credit cards that have rewards and cashback program to cut costs on things daily.
  • Your ratio of credit utilization will improve. Your credit utilization percentage refers to the amount of available credit that you are currently using. Credit cards that are used in multiple ways can increase your credit score through dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more prone to overspend, and eventually fall into debt.
  • It's simple to make unplanned 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 some time and energy. Even more so if payment schedules are different.
  • More cards could lead to the utilization of credit to be high. A high CUR could affect your credit score.
  • Different cards come with different perks. Insufficient cards mean not gaining the many advantages.
  • On the flip side it is possible that having too many cards can make keeping track of due dates a challenge. It could result in high interest and a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits: Look for cards that have various benefits, including travel rewards, cashback or low-interest rates.
  2. Annual Fees: Check to ensure that the card's advantages outweigh any annual fees.
  3. Interest Rates Low APRs are important unless you're confident that you'll repay the balance each month.
  4. Credit Limit: A higher credit limit could boost your credit utilization ratio, provided you don't use it to the max.

Average Number Credit Cards Should I Have

After looking at the advantages and disadvantages to owning multiple credit card accounts, let's take a look at how many credit cards to get. How many credit card accounts is too many, and how many are enough?

Financial experts suggest having 3 to five credit cards to create an rounded credit profile. This provides a range of advantages and improves the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

A variety of factors should be considered when deciding on the number of credit cards to keep. These include:

  • Credit score and past history: Your credit score and past history determine the number of credit cards to have. You can only be eligible on one or two credit lines if you have an unsatisfactory credit score or a poor credit history.
  • Spending and income: Your earnings and expenses will be vital. If you earn a high income and very low expenses, it is possible to use more credit cards than those with lower incomes and higher expenses.
  • Priorities and goals for your financial life: Priorities and financial goals will affect how many credit cards you should have. If you're trying to improve your credit rating or earn rewards, consider having several credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For people who do not have credit history: If you do not have credit history, then you might be eligible for one or two credit cards.
  • For people with average credit scores If your credit score is average, you may have a range of two to three credit cards.
  • for those with high credit scores: If you have excellent credit You may have four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

After we've examined the number of credit cards should you have we can look into how using multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

The fact that you have multiple credit cards can be beneficial to your credit score in a variety of ways, including:

  • Increased credit utilization ratio: Possessing multiple credit cards could assist in improving your CUR. It spreads the balances on 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

The fact that you have multiple credit cards can harm your credit score in these ways:

    • Increased risk of missing payments and delinquencies: Having many credit cards could result in the possibility of more frequent missed payments. There is also the chance of becoming delinquent to your credit card accounts.
    • Increased credit inquiries, as well as the creation of new accounts Application for multiple credit cards can generate multiple credit enquiries and new accounts. Both of these can affect your credit score.
    • Lower average age of your account Possessing 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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