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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 many credit accounts should I hold?" This question becomes much more relevant when you are considering the addition of tradelines to your credit score. Let's take a look at this topic from a different angle giving you the insights and guidelines to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit-cards you carry isn't just one of your personal choices for convenience. It also affects your credit score. Although you're aware of the fact that having an account with a credit card will improve your credit score, you're likely confused about how many credit cards you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we get into the details of how many credit cards you're required to own before we look at the benefits and downsides of owning multiple credit card.

Advantages of Owning Multiple Credit Cards

  • If you have multiple credit cards your credit limit might be greater. A higher credit limit is beneficial for emergency expenses or large purchases.
  • Utilize credit cards with rewards or cashback rewards to save some money on things daily.
  • Your ratio of credit utilization is likely to increase. Your credit utilization ratio is a reference to the percentage of your credit available that you are currently using. Credit cards that are used in multiple ways can improve your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more likely to spend more than you can afford and then fall into debt.
  • It's easy and convenient to make purchase that you cannot afford if you're carrying a number of credit cards.
  • Making multiple payments with credit cards can take an amount of time and effort. This is especially true if payment dates are different.
  • More credit cards can lead to high credit utilization. A high CUR can hurt your credit score.
  • Different cards have different benefits. Being too cautious with your cards can result in not gaining the many benefits.
  • On the other hand, having too many cards can make the process of keeping track of due dates a challenge. It could lead to high interest and a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Variety of Benefits: Find cards with various benefits, including cashback, travel rewards, or low-interest rates.
  2. Annual Fees: Make sure the card's benefits far exceed any annual charges.
  3. Interest Rates: A low APR is vital unless that you'll settle the balance every month.
  4. Credit Limit: A higher credit limit could improve your credit utilization ratio if you don't max it out.

Average Number Credit Cards Should I Have

Now that we have looked at the pros and cons of using several credit cards, let's examine the number of credit cards should you have. How many credit card accounts is enough? How many are sufficient?

Financial experts suggest having 3 to five credit cards in order to build a complete credit profile. This can offer a variety advantages and improves the ratio of credit utilization.

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 include:

  • History and credit score Your credit score as well as your past experience will determine the number of credit cards you'll need. You could only qualify on one or two credit lines if have low credit scores or a short credit history.
  • Spending and income: Your income and expenses will also be vital. If you're blessed with a higher income and very low expenses, it is possible to have more credit card accounts than those with lower incomes and more expenses.
  • Priorities and goals for your financial life Your goals in terms of finances and priorities will influence the number of credit cards you can own. If you're hoping to improve your credit score or earn rewards, you should 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 on a variety of scenarios:

  • For those with no credit history: If you don't have a credit history, you may be eligible for one or two credit cards.
  • For those having average credit scores If you have an average credit score, it is possible to have between two and three credit cards.
  • For people with outstanding credit scores: If you have excellent credit you can have at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have examined how many credit cards you should 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 have a positive impact on your credit score in a variety of ways which include:

  • Improved credit utilization ratio: Possessing multiple credit card accounts can assist 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

A number of credit cards on your account can be detrimental to your credit score in the following ways

    • Increased risk of missing payments and delinquencies: Having many credit cards can lead to an increased risk of avoiding payments. Also, there is a chance of being in delinquency to your credit card accounts.
    • Credit inquiries are increasing and so are new accounts Credit card applications for multiple cards can result in multiple credit inquiries and new accounts. Both of them can affect your credit score.
    • A lower average age for your account Multiple credit card accounts can help reduce the age average of your accounts. In turn, it can affect your credit score.
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