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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 the realm of personal finance is "How many credit cards can I use?" This question becomes more important when you are contemplating adding tradelines to your credit score. Let's dispel this nagging issue by providing you with the information and direction to make sound financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit cards you carry is not only an issue of personal convenience. It also affects your credit score. Although you're aware that having credit cards can boost 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 begin to discuss the number of credit cards you're supposed to have Let's first consider the advantages and disadvantages when you have multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're a credit card holder with multiple cards and credit limits, they could be greater. A higher credit limit is handy for emergencies or large purchases.
  • Use credit card rewards and cashback programs to save money when you purchase things daily.
  • Your ratio of credit utilization will rise. Your credit utilization number refers to the percentage of your credit available that you currently use. The use of multiple credit cards can improve your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make it more likely be tempted to overspend or go into debt.
  • It's easy to make unplanned purchase that you cannot afford if you have several credit cards.
  • Managing multiple credit cards can require much time and effort. More so if the payment timings differ.
  • The addition of more cards can result in very high utilization of credit. A high CUR could affect your credit score.
  • Different cards offer different perks. Having too few cards means you aren't getting the full advantages.
  • On the flip side having too many accounts can make keeping track on payment due dates challenging. It could lead 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 benefits, including travel rewards, cashback, or low-interest rates.
  2. Annual Fees Be sure that the card's benefits outweigh annual fees.
  3. Interest Rates In order to get a low interest rate, it's crucial unless you're confident that you'll pay the balance each month.
  4. Credit Limit: A higher credit limit could improve your credit utilization ratio, as long as that you don't max it out.

Average Number Credit Cards Should I Have

After having looked at the advantages and disadvantages of owning multiple credit card accounts, let's see the number of credit card you should have. How many credit cards are too much? And how many are sufficient?

Financial experts recommend having between 3 and five credit cards for a well-rounded credit history. This can provide a variety of benefits and can help improve the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

Many factors should be considered when deciding how many credit cards you have. These include:

  • Credit score and history Your credit score and record will help determine how many credit cards to have. You're only eligible on one or two credit lines if have a low credit score or have a poor credit record.
  • Costs and income: Your expenses and income will also be important. If you earn a high income and low expenses, you may have more credit cards than those with lower incomes and more expenses.
  • Priorities and financial goals Your goals in terms of finances and priorities also determine how many credit card you should own. If you're hoping to improve your credit score and earn rewards, you should consider having a variety of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • for those with no credit history: If you are not able to establish credit, you could be eligible for one or two credit cards.
  • For those having average credit scores If your credit score is average, you could own two or three credit cards.
  • For people with outstanding credit scores: If you have an excellent credit score you could be the owner of four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've looked at how many credit cards you're required to have let's consider how having multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit card accounts can be beneficial to your credit score in different ways which include:

  • A higher credit utilization ratio The use of multiple credit cards may aid in improving your CUR. It spreads out 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

Multiple credit cards may be detrimental to your credit score in these ways:

    • Increased risk of missing payments and delinquencies: having a large number of credit cards can result in an increased chance of missing payments. There is also the risk of becoming indebted with your account.
    • Increased credit inquiries, as well as the creation of new accounts The application process for multiple credit cards can produce multiple credit requests and new accounts. Both of these could lower your credit score.
    • A lower average age for your account A variety of credit cards can help reduce the average age of your accounts. This can lower your credit score.
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