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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 biggest questions that people have in the realm of personal finance is "How many credit cards should I have?" This question becomes even more relevant when you are considering the addition of tradelines to your credit profile. Let's take a look at this topic from a different angle and provide you with the understanding and direction to make sound financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit or debit cards you use is not only the result of personal convenience. It also influences your credit score. While you know that having a credit card can benefit your credit score, you're likely puzzled as to how many you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we go into how many credit cards to get, let's first look at the advantages and disadvantages when you have multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you own multiple credit cards your credit limit will be higher. A high credit limit is useful for emergencies or large purchases.
  • Use credit card rewards and cashback programs to save money on items on a regular basis.
  • Your ratio of credit utilization will rise. The credit utilization ratio refers to the amount of available credit that you currently use. Utilizing multiple credit cards can boost your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more prone to spend too much and end up in debt.
  • It's not difficult to make unexpected purchases you can't afford when you have several credit cards.
  • Making multiple payments with credit cards can require long and time. Even more so if payment schedules differ.
  • More cards can lead to a high rate of utilization. A high CUR could hurt your credit score.
  • Different cards come with different perks. Insufficient cards mean not gaining the many advantages.
  • On the flip side having too many accounts can make keeping track of payments due dates difficult. This can result in penalties for late payments and a deterioration of credit score.

Key Points to Consider When Applying for Credit Cards

  1. Different Benefits: Find cards that offer advantages, such as travel rewards, cashback, or low-interest rates.
  2. Annual Fees Check to ensure that the card's advantages outweigh the annual fee.
  3. Interest Rates: A lower APR is important unless you're confident that you'll be able to pay off the balance every month.
  4. Credit Limit: A higher credit limit can help improve your credit utilization ratio, if that you don't go over it.

Average Number Credit Cards Should I Have

Now that we have looked at the advantages and disadvantages to owning multiple credit cards, let's discuss the number of credit cards you should be carrying. What is excessive, and how many are sufficient?

Financial experts recommend having 3 to 5 credit card accounts to ensure a complete credit profile. This allows for various advantages and boosts 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 to hold. These factors include:

  • The credit score and the history: The credit score you have and your history will decide the number of credit card you should have. You're only eligible for one or two credit card if you have an unsatisfactory credit score or a poor credit history.
  • In addition to your expenses, your income and expenses will also be vital. If you're blessed with a higher income and lower expenses, you will be able to manage more credit cards than someone with a lower income and higher expenses.
  • Financial goals and priorities Your financial goals and priorities can influence the number of credit cards you can own. If you're looking for ways to improve 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 suggested numbers of credit cards based around different scenarios:

  • For people with no credit history If you have no credit history, you might be eligible for one or two credit cards.
  • For people with a credit score of average If your credit score is average, then you could have a range of two to three credit cards.
  • For people with excellent credit scores: If you have excellent credit scores you can have 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 consider how having multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards could affect your credit score through a variety of ways, including:

  • Better credit utilization ratio: Having multiple credit cards could help improve 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 impact your credit score the following ways:

    • Higher risk of missed payments and delinquencies credit cards could result in a higher risk of missing payments. There is also a risk of being in delinquency on your accounts.
    • Increased credit inquiries and the opening of new accounts Inquiring for multiple credit cards could generate multiple credit enquiries as well as new accounts. Both can lower your credit score.
    • A lower average age for your account The presence of multiple credit card accounts can reduce the average age of your accounts. As a result, it could lower your credit score.
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