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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 with regards to personal finance is "How many credit card should I get?" This question becomes particularly pertinent if you are contemplating adding trade lines to your credit profile. Let's take a look at this topic from a different angle giving you the insights and direction to make sound financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit and debit cards you have is not only something that you can do for personal convenience. It also affects the credit score. While you know that having an account with a credit card will improve 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 the number of credit cards you should own before we look at the advantages and disadvantages of owning a variety of credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're using multiple credit cards your credit limit will be greater. A credit limit of high amount is ideal for emergencies or large purchases.
  • Utilize credit cards with rewards and cashback programs to save money when you purchase things daily.
  • Your credit utilization ratio will increase. Your credit utilization ratio refers to the percentage of your credit available that you currently use. Making use of a variety of credit cards could increase your credit score through dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make it more likely to overspend, and eventually fall into debt.
  • It's not difficult to make unexpected purchase that you cannot afford if you're using a variety of credit cards.
  • managing multiple credit card accounts can require much time and effort. This is especially true if payment timings differ.
  • More cards can lead to high levels of credit utilization. A high CUR could affect your credit score.
  • Different cards offer different perks. If you have too many cards, you risk losing out on a variety of advantages.
  • On the flip side it is possible that having too many cards can make the process of keeping track of due dates a struggle. It can result to charges for late payments as well as a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Differential Benefits: Find cards that have perks, such as cashback, travel rewards, or low-interest rates.
  2. Annual Fees Check to ensure that the card's benefits are greater than the annual fee.
  3. Interest Rates Lower APRs are vital unless you're sure you'll pay off the debt every month.
  4. Credit Limit: A higher credit limit could improve your credit utilization ratio, if you don't reach the maximum limit.

Average Number Credit Cards Should I Have

After having looked at the pros and cons of having several credit cards, let's examine the number of credit cards you should own. How many credit cards is enough? And how many are sufficient?

Financial experts recommend having between 3 and 5 credit cards to have an rounded credit profile. This provides a range of benefits and helps with the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

A variety of factors should be considered when deciding on the number of credit cards one should have. These include:

  • Credit score and history Your credit score and record will help determine how many credit cards you should own. You're only eligible for credit cards with one or two points if you have low credit scores or a poor credit history.
  • Costs and income: Your expenses and income will also be important. If you have a good income and low expenses, you can use more credit cards than those with lower incomes and higher expenses.
  • Priorities and goals for your financial life: Your financial objectives and priorities can determine how many credit cards you can own. If you're trying to improve your credit score and 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, based upon various scenarios:

  • for those with no credit history If you don't have a credit history, you could be eligible for one or two credit cards.
  • For those with average credit scores If you have an average credit score, you might have up to three credit cards.
  • For people 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

After we've examined how many credit cards you're supposed to have We'll look at how applying multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit card accounts can affect your credit score by a variety ways, including:

  • Improved credit utilization ratio The fact that you have multiple credit cards can aid in improving your CUR. It spreads your balances across 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

Having multiple credit card accounts can cause damage to your credit score the following ways:

    • Greater risk of not paying and delinquencies credit cards can result in the possibility of more frequent missed payments. There is also the possibility of becoming indebted to your credit card accounts.
    • Credit inquiries are increasing and so are new accounts The application process for multiple credit cards could create multiple credit inquires and new accounts. Both of these can affect your credit score.
    • A lower average age for your account A variety of credit cards can lower the average age of your accounts. As a result, it could affect your credit score.
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