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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 most frequently asked questions in the field of personal finance is "How many credit cards do I need?" This question becomes even more relevant when you are contemplating adding trade lines to your credit profile. Let's decode this issue giving you the insights and guideline to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit cards you carry isn't just a matter 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 likely confused about how many credit cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we get into the number of credit cards you need to have Let's first consider the advantages and disadvantages associated with owning more than one credit card.

Advantages of Owning Multiple Credit Cards

  • If you have multiple credit cards your credit limit might be higher. A credit limit of high amount is handy for emergencies or large purchases.
  • Make use of credit cards with rewards and cashback schemes to save on things daily.
  • The ratio of your credit utilization will improve. The credit utilization ratio refers to the percentage of your available credit that you currently use. Using many credit cards 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, and often unplanned, to make purchases that you're not able to pay for when you're juggling multiple credit cards.
  • Managing multiple credit cards can require long and time. This is especially true if payment schedules are different.
  • More cards could lead to very high utilization of credit. A high CUR could harm your credit score.
  • Different cards provide different perks. Insufficient cards mean missing out on many advantages.
  • On the other hand having too many credit cards can make managing payment due dates difficult. It can result in penalties for late payments and a deterioration of credit score.

Key Points to Consider When Applying for Credit Cards

  1. Variety of Benefits: Look for cards that offer perks, such as travel rewards, cashback, or low-interest rates.
  2. Annual Fees Check to ensure that the card's benefits exceed any annual charges.
  3. Interest Rates: Lower APRs are vital unless you're sure that you'll pay 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

Now that we've looked at the benefits and disadvantages of owning multiple credit cards let's explore 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 to create a well-rounded credit history. This gives you a variety of advantages and boosts the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

A number of factors must be taken into consideration when deciding how many credit cards you have. These include:

  • Credit score and past history Your credit score and past history determine the number of credit cards you'll need. You are only eligible only for one or two credit accounts if you have low credit scores or a less than stellar credit history.
  • Earnings and expenses: Your earnings and expenses will be vital. If you earn a high income and lower expenses, you will be able to take on more credit cards than those with lower incomes and higher expenses.
  • Priorities and financial goals Your financial objectives and priorities will influence the number of credit-cards you should own. If you're trying to improve the credit score of your business or earn rewards you should consider having a variety of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For people with no credit history If there is no credit history for you, you might qualify for one or two credit cards.
  • For people with a good credit score: If you have an average credit score, then you could own two or three credit cards.
  • For people with outstanding credit scores: If you have excellent credit scores, you may hold 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 supposed to have We'll look at how applying multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards could positively impact your credit score in many ways including:

  • Improved credit utilization ratio: The fact that you have multiple credit cards can aid in improving your CUR. The 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

Multiple credit card accounts can be detrimental to your credit score in the following ways:

    • Greater risk of missing payments and delinquencies: Owning a lot of credit cards could result in the risk of having to miss payments. There is also a possibility of being in delinquency with your account.
    • Increased credit inquiries and the opening of new accounts Credit card applications for multiple cards can cause multiple credit inquiries as well as new accounts. Both of these can affect your credit score.
    • Lower average account age Possessing multiple credit cards can help lower the age average of your accounts. In turn, it could affect your credit score.
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