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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 in the field of personal finance is "How many credit cards can I use?" This question becomes crucial when you are thinking about adding tradelines to your credit report. Let's clarify this issue giving you the knowledge and direction to make sound financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit-cards you carry isn't just something that you can do for personal convenience. It also influences the credit score. While you know that having a credit line can help your credit score, you're likely confused about the number you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we look at the number of credit cards you're required to own let's look at the benefits and downsides that come with having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're using multiple credit cards the credit limit may be higher. A high credit limit is handy for emergencies or large purchases.
  • Use credit cards that have rewards and cashback schemes to save when you purchase items on a regular basis.
  • Your credit utilization ratio is likely to increase. Your credit utilization number refers to the amount of available credit that you currently use. Making use of a variety of credit cards could improve your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards could make it more likely to spend too much and end up in debt.
  • It's easy to make unplanned purchases that you aren't able to afford when you're carrying a number of credit cards.
  • The management of multiple credit cards can take much time and effort. In particular, if the payments schedules change.
  • A lot of cards can result in high levels of credit utilization. A high CUR can hurt your credit score.
  • Different cards provide different perks. With too few cards, you risk being deprived of many benefits.
  • On the other hand having too many accounts can make tracking payment due dates a challenge. It can result 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 perks, such as cashback, travel rewards, or low-interest rates.
  2. Annual Fees It is important to make sure the card's benefits surpass the annual fee.
  3. Interest Rates A lower APR is essential unless that you'll pay the balance every month.
  4. Credit Limit: A higher credit limit can help your credit utilization ratio, provided you don't overdraw it.

Average Number Credit Cards Should I Have

After looking at the benefits and disadvantages of owning multiple credit cards, let's consider how many credit cards you should be carrying. What is too much, and how many are enough?

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

Factors to Consider When Deciding The Number Credit Cards to Own

Numerous factors should be taken into account when deciding how many credit cards to hold. These factors include:

  • The credit score and the history Your credit score and history will determine how many credit card you should have. You will only be eligible for a couple of credit cards, if have a low credit score or a weak credit history.
  • In addition to your expenses, your income and expenses will also be crucial. If you have an excellent income and low expenses, you could take on more credit cards than someone with a lower income and more expenses.
  • Priorities and financial goals: Your financial objectives and priorities also determine how many credit card you should have. If you're trying to improve your credit score, or earn rewards, you should consider having several credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For those with no credit history If you don't have a credit history, you might qualify for one or two credit cards.
  • For those having average credit scores If you have an average credit score, you might have up to three credit cards.
  • For people with outstanding credit scores: If you have excellent credit, you may own four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've examined how many credit cards to get we can look into how using multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards could have a positive impact on your credit score by a variety ways which include:

  • Increased credit utilization ratio: Owning multiple credit cards can help improve 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 damage your credit score these ways:

    • Greater risk of missing payments and delinquencies: having a large number of credit cards could result in the possibility of more frequent missed payments. There is also a possibility of becoming indebted on your accounts.
    • Increased credit inquiries, as well as the creation of new accounts Credit card applications for multiple cards could lead to multiple credit inquiries as well as new accounts. Both can impact your credit score.
    • A lower average age for your account Multiple credit card accounts can help lower the age average of your accounts. As a result, it can affect your credit score.
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