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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 in personal finance is "How how many credit-cards should I carry?" This question becomes even more relevant when you are considering the addition of tradelines to your credit score. Let's break down this subject by providing you with the information and guidance to make shrewd financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit cards you have isn't just an issue of personal comfort. It also affects the credit score. While you're aware that a credit line can help your credit score, you're probably not sure how many cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we begin to discuss how many credit cards you need to have Let's first consider the advantages and disadvantages of having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you've got several credit cards, your credit limit can be higher. A high credit limit is ideal for emergencies or large purchases.
  • Make use of credit cards with rewards or cashback programs to reduce your expenses when you purchase things on a daily basis.
  • Your ratio of credit utilization will increase. Your credit utilization ratio is a reference to the percentage of your available credit that you currently use. Credit cards that are used in multiple ways can boost your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards are a great way to increase the likelihood to overspend and go into debt.
  • It's easy, and often unplanned, to make purchases you can't afford when you have several credit cards.
  • The management of multiple credit cards could take time and effort. Particularly if the pay dates are different.
  • The more cards you have can lead to an increase in credit utilization. A high CUR could affect your credit score.
  • Different cards have different benefits. Being too cautious with your cards can result in not gaining the many benefits.
  • On the flip side the other hand, having a lot of cards can make tracking payment due dates a struggle. It can lead to problems with late fees and a lower credit score.

Key Points to Consider When Applying for Credit Cards

  1. Variety of Benefits: Look for cards that offer benefits, including travel rewards, cashback or low-interest rates.
  2. Annual Fees It is important to make sure the card's rewards outweigh any annual charges.
  3. Interest Rates A low APR is crucial unless you're confident you'll pay off the balance every month.
  4. Credit Limit: A higher credit limit can improve your credit utilization rate, if you don't exceed it.

Average Number Credit Cards Should I Have

Now that we've looked at the pros and cons of using multiple credit cards, let's consider the number of credit card you should have. How many credit cards are too much? And how many are enough?

Financial experts recommend having 3 to five credit cards for a balanced credit profile. This will provide many benefits and helps with 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 how many credit cards to keep. These include:

  • The credit score and the history: The credit score you have and your history will decide how many credit cards to get. You will only be eligible to get one or two credit cards in the event that you have an unsatisfactory credit score or a short credit history.
  • Earnings and expenses: Your earnings and expenses will be vital. If you've got a high income and low expenses, you can manage more credit card payments than someone with a lower income and more expenses.
  • Priorities and financial goals Your financial objectives and priorities will also affect the number of credit card you need to own. If you are looking to improve your credit score, or earn rewards, think about having several credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For those with no credit history If you're not creditworthy, you may qualify for one or two credit cards.
  • For those who have average credit scores If you're averaging credit score, you could be able to have three or more credit cards.
  • For those with excellent credit scores: If you have an excellent credit score, you may own four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've discussed how many credit cards to get let's examine how applying multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Possessing multiple credit cards may improve your credit score through a variety of ways and include:

  • Increased credit utilization ratio: Having multiple credit cards could aid in improving your CUR. The spreads 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

Having multiple credit card accounts can affect your credit score in these ways:

    • Higher risk of late payments and delinquencies credit cards could result in an increased chance of missing payments. There's also a chance of becoming indebted to your credit card accounts.
    • Increased credit inquiries, as well as the creation of new accounts The application process for multiple credit cards can lead to multiple credit inquiries and 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 reduce the age average of your accounts. In turn, it could affect your credit score.
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