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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 question that perplexes individuals when it comes to personal finance is "How how many credit-cards should I carry?" This question becomes particularly pertinent if you are thinking about adding tradelines to your credit profile. Let's take a look at this topic from a different angle to provide you with the necessary information and the path to take confident financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit and debit cards you have is not only one of your personal choices for convenience. It also affects the credit score. While you know that having credit cards can boost your credit score, you're probably confused as to how many credit cards you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we dive into how many credit cards you're required to own, let's first look at the advantages and disadvantages of having several credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're using multiple credit cards, your credit limit can be higher. A higher credit limit can be advantageous for emergencies or large purchases.
  • Make use of credit cards that have rewards or cashback programs to reduce your expenses on items on a regular basis.
  • The ratio of your credit utilization will increase. Your credit utilization ratio refers to the percentage of your available credit that you are currently using. Credit cards with multiple accounts can boost your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make it more likely to overspend and fall into debt.
  • It's easy to make impulse purchase that you cannot afford if you have several credit cards.
  • Making multiple payments with credit cards can require long and time. It is even more difficult if the payment times are different.
  • More credit cards can lead to higher credit utilization. A high CUR can impact your credit score.
  • Different cards come with different perks. If you have too many cards, you risk being left out of many benefits.
  • On the other hand, having too many cards can make keeping track of payments due dates a struggle. This can result in late fees and a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Different Benefits: Find cards that have perks, such as travel rewards, cashback, or low-interest rates.
  2. Annual Fees: Check to ensure that the card's rewards outweigh any annual fees.
  3. Interest Rates A lower APR is important unless you're confident that you'll finish the balance each month.
  4. Credit Limit: A higher credit limit can help your credit utilization ratio as long as you don't use it to the max.

Average Number Credit Cards Should I Have

Now that we've looked at the pros and cons of owning multiple credit cards, let's discuss how many credit cards you ought to have. How many credit cards are excessive, and how many are sufficient?

Financial experts suggest having between 3 and five credit cards in order to build a well-rounded 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

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

  • Credit score and past history: The credit score you have and your history will decide the number of credit cards you need. You're only eligible for one or two credit card if you have an unsatisfactory credit score or a less than stellar credit history.
  • Income and expenses: Your earnings and expenses will be vital. If you have an excellent income and little expenses, you are able to manage more credit card payments than those with lower incomes and more expenses.
  • Priorities and goals for your financial life: The goals you have for your finances and the priorities can affect the number of credit card you should possess. If you're hoping to improve your credit score, or earn rewards, you should consider having a variety of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For those who have no credit history: If you do not have credit history, then you may be eligible for one or two credit cards.
  • For those with credit scores that are average: If you have an average credit score, it is possible to own two or three credit cards.
  • For those with outstanding credit scores: If you have excellent credit, you may own at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've examined the number of credit cards you're required to have Let's look at how using multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Owning multiple credit cards can improve your credit score in a variety of ways in which they include:

  • Increased credit utilization ratio Possessing multiple credit card accounts can help improve your CUR. It 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

The fact that you have multiple credit cards can damage your credit score the following ways

    • Greater risk of not paying and delinquencies credit card accounts can mean the possibility of more frequent missed payments. There is also a risk of becoming delinquent with your account.
    • Increased credit inquiries and new accounts Inquiring for multiple credit cards can create multiple credit inquires and new accounts. Both of them could affect your credit score.
    • Lower average age of your account Multiple credit card accounts can help lower the average age of your accounts. As a result, it could lower your credit score.
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