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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 enigmatizing questions for people in the realm of personal finance is "How many credit accounts should I hold?" This question becomes more important when you are contemplating adding tradelines to your credit score. Let's decode this issue, offering you the insight as well as a roadmap to help you make smart financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit card you use is not only one of your personal choices for convenience. It also affects your credit score. While you know that having the right credit card can boost your credit score, you're likely confused about how many credit cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we look at the number of credit cards you're supposed to have Let's first consider the advantages and disadvantages of owning multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you own multiple credit cards, your credit limit can be greater. A higher credit limit is advantageous for emergencies or large purchases.
  • Utilize credit cards that offer rewards and cashback schemes to save when you buy things daily.
  • The ratio of your credit utilization will increase. Your credit utilization ratio is a reference to the percentage of your available credit that you currently use. A variety of credit cards can improve your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more prone be tempted to overspend or go into debt.
  • It's easy to make unplanned purchases you can't afford when you're carrying a number of credit cards.
  • The management of multiple credit cards can require much time and effort. Particularly if your payment timings differ.
  • More cards could lead to very high utilization of credit. A high CUR can negatively impact your credit score.
  • Different cards have different benefits. If you have too many cards, you risk being left out of many advantages.
  • On the flip side having too many cards can make the task of calculating payment due dates a challenge. It could result in unpaid fees and a degraded credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diversity of Benefits: Look for cards that provide a variety of benefits, including cashback, travel rewards, or low-interest rates.
  2. Annual Fees: Be sure that the card's benefits exceed any annual fees.
  3. Interest Rates In order to get a low interest rate, it's important unless you're confident that you'll repay the balance every month.
  4. Credit Limit: A higher credit limit can help 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 advantages and disadvantages of having multiple credit cards, let's consider the number of credit cards you should own. How many credit card accounts is too much, and how many are enough?

Financial experts suggest having 3 to five credit cards for a well-rounded credit history. This allows for various benefits and helps 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 to hold. These include:

  • Credit score and history Your credit score and past history determine the number of credit cards you are eligible for. You could only qualify for one or two credit card if have an unsatisfactory credit score or a weak credit history.
  • Budget and income: Your earnings and expenses will be vital. If you're blessed with a higher income and low expenses, you may manage more credit cards than those with lower incomes and more expenses.
  • Priorities and goals for your financial life Your financial objectives and priorities will determine how many credit cards you should own. If you're looking for ways to improve your credit score or earn rewards, consider owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some recommended numbers of credit cards based on different scenarios:

  • For people who do not have credit history If you're not creditworthy, you may qualify for one or two credit cards.
  • For those having average credit scores If your credit score is average, you could be able to have three or more credit cards.
  • for those with high credit scores: If you have excellent credit scores, you may own at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

After we've discussed how many credit card you should have let's examine how applying 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 in various ways such as:

  • Increased credit utilization ratio The fact that you have multiple credit cards can aid in improving your CUR. It spreads out your balances over 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 could cause damage to your credit score the following ways

    • Risk of missed payments and delinquencies: Owning a lot of credit cards may result in an increased risk of avoiding payments. There is also a risk of being in delinquency with your account.
    • Increased credit inquiries and the opening of new accounts: Applying for multiple credit cards could result in multiple credit queries as well as new accounts. Both of these could lower your credit score.
    • A lower average age for your account The fact that you have multiple credit cards can lower the age average of your accounts. In turn, it can lower your credit score.
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