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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 issues that confuse people with regards to personal finance is "How how many credit-cards should I carry?" This question becomes more pertinent when you are considering the addition of trade lines to your credit profile. Let's break down this subject 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 have is not only the result of personal convenience. It also affects the credit score. While you're aware that an account with a credit card will improve 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 dive into how many credit cards you're required to own before we look at the benefits and downsides when you have multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you own multiple credit cards the credit limit may be higher. A credit limit of high amount is advantageous for emergencies or large purchases.
  • Use credit card rewards and cashback schemes to save on things on a daily basis.
  • Your credit utilization ratio is likely to increase. Your credit utilization rate refers to the percentage of your credit available that you currently use. Utilizing multiple credit cards can increase your credit score through splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more likely to overspend and go into debt.
  • It's easy for people to make unplanned purchases that aren't financially feasible when you're juggling multiple credit cards.
  • It can be difficult to manage multiple credit card accounts. It will take considerable time and effort. It is even more difficult if the payment schedules differ.
  • The addition of more cards can result in higher credit utilization. A high CUR can affect your credit score.
  • Different cards provide different perks. Having too few cards means not getting all the advantages.
  • On the other hand, having too many cards can make managing payment due dates challenging. It can result to the occurrence of late fees and damage to your credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diversity of Benefits Look for cards that have various perks, such as travel rewards, cashback, or low-interest rates.
  2. Annual Fees: You must ensure the card's benefits far exceed the annual fee.
  3. Interest Rates It is vital unless that you'll have enough money to pay off the balance each month.
  4. Credit Limit: A higher credit limit can help improve your credit utilization ratio, so long as you don't max it out.

Average Number Credit Cards Should I Have

Now that we've looked at the pros and cons of using multiple credit card accounts, let's see the number of credit cards to get. How many credit card accounts is too much? And how many are enough?

Financial experts recommend having 3 to five credit cards to ensure a balanced credit profile. This offers a variety of benefits and helps improve the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

Numerous factors should be taken into account when deciding on the number of credit cards one should have. These include:

  • Credit score and past history: Your credit scores and histories will affect the number of credit card you should have. You'll only be able to qualify for credit cards with one or two points if have an unsatisfactory credit score or a less than stellar credit history.
  • Spending and income: Your income and expenses can be important. If you've got a high income and low expenses, you can have more credit card accounts than someone with a lower income and higher expenses.
  • Financial goals and priorities Your goals in terms of finances and priorities will affect the number and type of credit cards you need to own. If you're looking to improve the credit score of your business or earn rewards you should consider having several credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some suggested numbers of credit cards based on various scenarios:

  • For those with no credit history If you're without credit, might qualify for one or two credit cards.
  • For people who have average credit scores If you have an average credit score, you might possess two to three credit cards.
  • For people with outstanding credit scores: If you have an excellent credit score you may have at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've examined the number of credit cards to get let's consider how having multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Owning multiple credit cards can be beneficial to your credit score in different ways including:

  • Increased credit utilization ratio Owning multiple credit cards can aid 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 harm your credit score in the following ways

    • Risk of missed payments and delinquencies: having a large number of credit cards could result in greater risk of missing payments. There is also the chance of being in delinquency to your credit card accounts.
    • Increased credit inquiries and the opening of new accounts Inquiring for multiple credit cards could produce multiple credit requests and new accounts. Both of them could affect your credit score.
    • Lower average age of your account: Owning multiple credit cards can reduce the age average of your accounts. As a result, it can affect your credit score.
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