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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 enigmatizing questions for people with regard to their finances is "How much credit card do I require?" This question becomes more pertinent when you are considering the addition of tradelines to your credit profile. Let's take a look at this topic from a different angle, offering you the insight and guidelines to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of cards you hold is not just the result of personal convenience. It also affects the credit score. Although you're aware of the fact that having credit cards can help your credit score, you're probably uncertain about the amount you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we get into how many credit cards you need to have We'll first discuss the benefits and downsides of having several credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're a credit card holder with multiple cards, your credit limit can be higher. A credit limit of high amount is great for emergency expenses or large purchases.
  • Make use of credit cards with rewards and cashback program to cut costs on things daily.
  • Your ratio of credit utilization will rise. Your credit utilization ratio refers to the amount of credit available that you are currently using. 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 enter debt.
  • It's simple to make unplanned purchases you can't afford when you're juggling multiple credit cards.
  • Making multiple payments with credit cards can take time and effort. More so if the payment dates are different.
  • More credit cards can lead to an increase in credit utilization. A high CUR could harm your credit score.
  • Different cards have different benefits. Too many cards could mean being deprived of many benefits.
  • On the other hand the other hand, having too many cards can make tracking payment due dates difficult. 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 Find cards that provide various advantages, such as travel rewards, cashback or low-interest rates.
  2. Annual Fees: You must ensure the card's rewards outweigh any annual fees.
  3. Interest Rates Low APRs are crucial unless you're confident that you'll pay the balance every month.
  4. Credit Limit: A higher credit limit can boost your credit utilization ratio as long as you don't exceed it.

Average Number Credit Cards Should I Have

Now that we have looked at the advantages and disadvantages of owning multiple credit card accounts, let's take a look at how many credit cards you need to have. How many credit cards is too much? And how many are enough?

Financial experts suggest having between 3 and five credit cards to ensure an rounded credit profile. This gives you many benefits and can also help with the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

There are many factors to take into consideration when deciding on the number of credit cards to have. These factors include:

  • The credit score and the history: Your credit scores and histories will affect the number of credit cards you need. It is possible to only qualify only for one or two credit accounts if you have poor credit scores or a limited credit history.
  • Budget and income: Your expenses and income will also be crucial. If you're blessed with a higher income and low expenses, you may have more credit cards than those with lower incomes and higher expenses.
  • Priorities and goals for your financial life The goals you have for your finances and the priorities will affect the number of credit card you should own. If you are looking to improve your credit rating or earn rewards, think about owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For those with no credit history: If you're not creditworthy, you could qualify for one or two credit cards.
  • For those having average credit scores If you have an average credit score, it is possible to own two or three credit cards.
  • for those with high credit scores: If you have excellent credit, you may own four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

After we've discussed how many credit cards you're required to have let's examine how applying 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 positively impact your credit score by a variety ways for example:

  • Increased credit utilization ratio Owning multiple credit cards can aid in improving your CUR. The spreads your balances among 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 card accounts can impact your credit score these ways:

    • Greater risk of not paying and delinquencies: Having many credit card accounts could lead to an increased risk of not making payments. There's also a chance of being in delinquency with your account.
    • New and increased credit inquiries as well as new accounts If you apply for several credit cards can produce multiple credit requests 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 lower the age average of your accounts. This can affect your credit score.
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