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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


A question that is often asked by people with regards to personal finance is "How much credit card do I require?" This question becomes even more relevant when you are contemplating adding tradelines to your credit profile. Let's break down this subject by providing you with the information and guidelines to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit-cards you carry is not only one of your personal choices for convenience. It also affects your credit score. Although you're aware that having credit cards can improve your credit score, you're probably 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 allowed to have before we look at the benefits and downsides of owning multiple credit card.

Advantages of Owning Multiple Credit Cards

  • If you're using multiple credit cards, your credit limit can be higher. A credit limit that is high is ideal for emergencies and large purchases.
  • Use credit card rewards and cashback schemes to save on items on a regular basis.
  • Your ratio of credit utilization will increase. The credit utilization ratio refers to the amount of credit available that you are currently using. Utilizing multiple credit cards can increase your credit score through dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards could make it more likely to spend more than you can afford and then fall into debt.
  • It's easy to make unplanned expenditures that aren't feasible if you have several credit cards.
  • Managing multiple credit cards can take an amount of time and effort. Particularly if the payment schedules vary.
  • More credit cards can lead to excessive credit utilization. A high CUR could hurt your credit score.
  • Different cards offer different perks. The lack of cards means being deprived of many benefits.
  • On the other hand it is possible that having too many cards can make keeping track on payment due dates difficult. It can lead to overdue fees and damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits: Look for cards that offer perks, such as travel rewards, cashback, or low-interest rates.
  2. Annual Fees: It is important to make sure the card's benefits are greater than the annual fee.
  3. Interest Rates Low APRs are vital unless that you'll repay the balance each month.
  4. Credit Limit: A higher credit limit can help improve your credit utilization ratio if you don't max it out.

Average Number Credit Cards Should I Have

After looking at the pros and cons of owning multiple credit card accounts, let's take a look at the number of credit cards you should own. How many credit cards is enough? How many are enough?

Financial experts recommend having between 3 and five credit cards for an rounded credit profile. This gives you a variety 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 to keep. These factors include:

  • History and credit score: Your credit history and score will dictate the number of credit card you should have. You may only qualify for a couple of credit cards, if have low credit scores or a credit history that is not as good.
  • Spending and income: Your income and expenses can be vital. If you have an excellent income and low expenses, you may handle more credit cards than those with lower incomes and higher expenses.
  • Priorities and financial goals: Your goals in terms of finances and priorities will also affect the number and type of credit cards you should possess. If you're looking for ways to improve your credit rating or earn rewards, think about having several credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For people who do not have credit history If you do not have credit history, then you might be eligible for one or two credit cards.
  • For those with a credit score of average If your credit score is average, you may be able to have three or more credit cards.
  • For those with excellent credit scores: If you have excellent credit scores you may be able to hold four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

After we've discussed how many credit cards you're required to have Let's take a look at how applying multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Owning multiple credit cards can positively impact your credit score in many ways and include:

  • A higher credit utilization ratio Having multiple credit card accounts can help improve your CUR. It spreads your balances among 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

Owning multiple credit cards can hurt your credit score in these ways:

    • Higher risk of missed payments and delinquencies credit cards can increase greater risk of missing payments. There is also a chance of becoming delinquent with your account.
    • More credit inquiries and new accounts When you apply for multiple credit cards could cause multiple credit inquiries and new accounts. Both can negatively impact your credit score.
    • A lower average age for your account Multiple credit cards can lower the average age of your accounts. In turn, it could affect your credit score.
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