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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 the field of personal finance is "How much credit card do I require?" This question becomes more important when you are contemplating adding tradelines to your credit report. Let's decode this issue by providing you with the facts and a plan to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit-cards you carry isn't just an issue of personal convenience. It also affects 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 uncertain about the amount you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we get into the number of credit cards you're required to own First, let's take a look at the benefits and downsides of owning a variety of credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're a credit card holder with multiple cards, your credit limit can be greater. A credit limit that is high is ideal for emergencies or large purchases.
  • Use credit cards with rewards and cashback offers to save you money when you buy items on a regular basis.
  • Your ratio of credit utilization will rise. The credit utilization ratio refers to the percentage of your available credit that you are currently using. Credit cards that are used in multiple ways can boost your credit score by 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 impulsive purchase that you cannot afford if you have many credit cards.
  • The management of multiple credit cards can require more time and effort. This is especially true if payment schedules change.
  • More cards could lead to the utilization of credit to be high. A high CUR could affect your credit score.
  • Different cards offer different perks. If you have too many cards, you risk not getting all the benefits.
  • On the other hand having too many accounts can make tracking payment due dates challenging. It could lead to late fees and a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diversity of Benefits: Find cards that come with perks, such as travel rewards, cashback, or low-interest rates.
  2. Annual Fees You must ensure the card's benefits exceed any annual costs.
  3. Interest Rates A lower APR is essential unless you're certain you'll pay off the debt every month.
  4. Credit Limit: A higher credit limit can help improve your credit utilization rate, if you don't use it to the max.

Average Number Credit Cards Should I Have

After having looked at the benefits and disadvantages of owning several credit cards, let's think about how many credit cards you should have. What is excessive, and how many are sufficient?

Financial experts suggest having 3 to five credit cards to create a complete credit profile. This offers a variety of benefits and helps improve the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

Several factors must be considered when deciding how many credit card accounts to own. These factors include:

  • The credit score and the history Your credit score and history will determine the number of credit cards you should own. You could only qualify for credit cards with one or two points if you have an unsatisfactory credit score or a credit history that is not as good.
  • Budget and income: Your earnings and expenses will be important. If you have a high income and low expenses, you can have more credit cards than someone with a lower income and more expenses.
  • Financial goals and priorities: Your goals in terms of finances and priorities can determine how many credit cards you should own. If you want to improve the credit score of your business or earn rewards think about having a variety of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some recommended numbers of credit cards that are based on a variety of scenarios:

  • For people with no credit history: If you don't have a credit history, you could be eligible for one or two credit cards.
  • For people with a credit score of average If your credit score is average, then you could own two or three credit cards.
  • For people with outstanding credit scores: If you have an excellent credit score you can have four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we've examined how many credit cards you're supposed to have let's consider how having multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Possessing multiple credit cards may be beneficial to your credit score in a variety of ways which include:

  • Increased credit utilization ratio The use of multiple credit cards may aid in improving your CUR. The 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

Owning multiple credit cards can negatively impact your credit score these ways:

    • Higher risk of missed payments and delinquencies: Having many credit cards may result in greater risk of missing payments. There's also a chance of becoming delinquent with your account.
    • More credit inquiries and new accounts Application for multiple credit cards can result in multiple credit queries as well as new accounts. Both of these can affect your credit score.
    • Lower average account age Multiple credit cards can help reduce the age average of your accounts. As a result, it could affect your credit score.
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