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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 in their personal finances is "How many credit cards can I use?" This question becomes especially pertinent when are thinking about adding tradelines to your credit profile. Let's take a look at this topic from a different angle and provide you with the understanding and guideline to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit and debit cards you have is not just something that you can do for personal convenience. It also influences the credit score. Although you're aware of the fact that having an account with a credit card will improve your credit score, you're probably confused as to how many credit cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we look at how many credit cards you're allowed to have First, let's take a look at the advantages and disadvantages when you have multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're carrying multiple credit card, your credit limit can be higher. A credit limit that is high is advantageous for emergencies or large purchases.
  • Use credit cards that have rewards and cashback schemes to save on things daily.
  • Your ratio of credit utilization is likely to increase. Your credit utilization rate refers to the amount of 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 you more prone to overspend, and eventually fall into debt.
  • It's easy to make impulse purchases that aren't affordable when there are a lot of credit card accounts.
  • It can be difficult to manage multiple credit card accounts. It will require time and effort. More so if the payment times are different.
  • More cards can lead to very high utilization of credit. A high CUR could hurt your credit score.
  • Different cards have different benefits. Being too cautious with your cards can result in being left out of many advantages.
  • On the flip side having too many credit cards can make managing payment due dates challenging. 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 travel rewards, cashback or low-interest rates.
  2. Annual Fees: Make sure the card's benefits exceed annual fees.
  3. Interest Rates The APR should be low. vital unless you're sure that you'll settle the balance each month.
  4. Credit Limit: A higher credit limit can improve your credit utilization ratio as long as that you don't max it out.

Average Number Credit Cards Should I Have

After looking at the advantages and disadvantages of having multiple credit card accounts, let's take a look at the number of credit cards you should be carrying. How many credit cards is too much? And how many are enough?

Financial experts suggest having 3 to 5 credit card accounts to ensure an extensive credit profile. This can provide a variety of advantages and can improve the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

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

  • History and credit score: Your credit score and history will determine how many credit cards you need. You will only be eligible for credit cards with one or two points if you have a low credit score or a poor credit history.
  • The amount of your earnings and expenses will be crucial. If you're blessed with a higher income and little expenses, you are able to handle more credit cards than those with lower incomes and higher expenses.
  • Priorities and goals for your financial life The goals you have for your finances and the priorities will influence the number of credit-cards you should possess. If you're looking to boost the credit score of your business or earn rewards you should consider owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For people who do not have credit history If you are not able to establish credit, you may be eligible for one or two credit cards.
  • For people with a credit score of average If you have an average credit score, then you could have a range of two to three credit cards.
  • for those with high credit scores: If you have excellent credit scores you could be the owner of four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have examined how many credit cards to get, let's explore how applying multiple credit cards can affect 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 in different ways that include:

  • A higher credit utilization ratio Owning multiple credit cards can aid in improving 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

Multiple credit card accounts can impact your credit score the following ways:

    • Greater risk of missing payments and delinquencies credit cards can increase the risk of having to miss payments. There is also a possibility of becoming indebted with your account.
    • More credit inquiries and new accounts Inquiring for multiple credit cards can lead to multiple credit inquiries as well as new accounts. Both of these could lower your credit score.
    • Lower average account age Multiple credit card accounts can lower the average age of your accounts. As a result, it could lower your credit score.
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