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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 with regard to their finances is "How how many credit-cards should I carry?" This question becomes particularly pertinent if you are considering the addition of trade lines to your credit profile. Let's clarify this issue by providing you with the facts and guideline to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit-cards you carry is not only a matter of personal convenience. It also affects your credit score. While you're aware that a credit card can benefit your credit score, you're probably perplexed about how many you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we discuss how many credit card you should own We'll first discuss the benefits and downsides that come with having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're carrying multiple credit card your credit limit could be greater. A higher credit limit is useful for emergencies or large purchases.
  • Use credit card rewards and cashback program to cut costs on things daily.
  • Your ratio of credit utilization will rise. The credit utilization ratio refers to the percentage of your credit available that you currently use. Utilizing multiple credit cards can increase your credit score through dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards could make it more likely to overspend and go into debt.
  • It's easy to make impulse expenditures that aren't feasible if there are a lot of credit card accounts.
  • The management of multiple credit cards can take some time and energy. Particularly if the pay schedules are different.
  • More cards can result in an increase in credit utilization. A high CUR can negatively impact your credit score.
  • Different cards offer different perks. If you have too many cards, you risk not gaining the many benefits.
  • On the other hand having too many credit cards can make the task of calculating payment due dates difficult. It could result in penalties for late payments and a deterioration of credit score.

Key Points to Consider When Applying for Credit Cards

  1. Differential Benefits: Look for cards that have perks, such as cashback, travel rewards, or low-interest rates.
  2. Annual Fees Be sure that the card's benefits far exceed any annual charges.
  3. Interest Rates A lower APR is vital unless you're sure that you'll settle the balance each month.
  4. Credit Limit: A higher credit limit could boost your credit utilization ratio if you don't exceed the limit.

Average Number Credit Cards Should I Have

Now that we've looked at the pros and cons of having several credit cards, let's think about how many credit cards you ought to have. How many credit cards is too many, and how many are sufficient?

Financial experts recommend having 3 to five credit cards for a complete credit profile. This allows for various benefits and can help improve the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

A variety of factors should be considered when deciding how many credit cards to own. These include:

  • Credit score and past history The credit score you have and your history will decide how many credit cards to get. You're only eligible only for one or two credit accounts if you have low credit scores or a poor credit history.
  • The amount you earn and the expenses you incur: Your expenses and income will also be vital. If you have a good income and very low expenses, it is possible to manage more credit cards than someone with a lower income and higher expenses.
  • Priorities and financial goals: The goals you have for your finances and the priorities will influence the number of credit-cards you should have. If you're looking to boost your credit score, or earn rewards, consider owning a number of 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 those who have no credit history If you do not have credit history, then you might be eligible for one or two credit cards.
  • For those with average credit scores: If you have an average credit score, it is possible to possess two to three credit cards.
  • For those with excellent credit scores: If you have excellent credit, you may own four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have looked at how many credit card you should have Let's see 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 have a positive effect on your credit score in several ways in which they include:

  • Improved credit utilization ratio Having multiple credit card accounts can aid 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

Possessing multiple credit cards can be detrimental to your credit score in these ways:

    • Higher risk of late payments and delinquencies credit card accounts can mean the risk of having to miss payments. There is also a risk of becoming indebted on your accounts.
    • More credit inquiries and new accounts Application for multiple credit cards could lead to multiple credit inquiries and new accounts. Both of them could affect your credit score.
    • Lower average age of your account Possessing multiple credit cards can lower the average age of your accounts. In turn, it could lower your credit score.
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