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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 question that perplexes individuals in 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 report. Let's simplify this subject by providing you with the information 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 preference. It also affects the credit score. While you know that having credit cards can boost your credit score, you're probably uncertain about the amount you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we discuss how many credit cards you're required to own Let's first consider the advantages and disadvantages of owning a variety of credit cards.

Advantages of Owning Multiple Credit Cards

  • If you are a holder of multiple credit cards, your credit limit can be greater. A high credit limit is beneficial for emergency expenses or large purchases.
  • Utilize credit cards that offer rewards or cashback rewards to save some money when you buy things daily.
  • Your ratio of credit utilization is likely to increase. Your credit utilization rate refers to the percentage of your credit available that you are currently using. Utilizing multiple credit cards may increase your credit score through splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more likely to overspend and fall into debt.
  • It's easy and convenient to make expenditures that aren't feasible if you're using a variety of credit cards.
  • The management of multiple credit cards can take considerable time and effort. Particularly if your payment schedules differ.
  • A lot of cards can result in an increase in credit utilization. A high CUR could affect your credit score.
  • Different cards have different benefits. If you have too many cards, you risk being left out of many benefits.
  • On the other hand having too many credit cards can make tracking payment due dates challenging. It can result in penalties for late payments and a deterioration of credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits: Look for cards that offer perks, such as cashback, travel rewards, or low-interest rates.
  2. Annual Fees: Check to ensure that the card's benefits exceed any annual costs.
  3. Interest Rates: A lower APR is essential unless that you'll be able to pay off the balance each month.
  4. Credit Limit: A higher credit limit can help your credit utilization ratio, as long as you don't max it out.

Average Number Credit Cards Should I Have

After looking at the pros and cons of having multiple credit cards let's explore how many credit cards should you have. How many credit card accounts is too much? And how many are enough?

Financial experts recommend having between 3 and 5 credit cards for a comprehensive credit profile. This provides a range of benefits and can also help with the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

There are many factors to take into consideration when deciding how many credit cards you will own. These include:

  • The credit score and the history Your credit score, history and scores will determine how many credit cards to get. You're only eligible to apply for one or more credit cards if you have a low credit score or a credit history that is not as good.
  • In addition to your expenses, your earnings and expenses will be important. If you earn a high income and low expenses, you can manage more credit card payments than someone with a lower income and more expenses.
  • Priorities and goals for your financial life Your goals in terms of finances and priorities will affect the number and type of credit cards you should have. If you're hoping to improve your credit score or earn rewards think about owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some recommended numbers of credit cards that are based off of different scenarios:

  • For those with no credit history If you're without credit, might be eligible for one or two credit cards.
  • For people with average credit scores If you're averaging credit score you may have up to three credit cards.
  • for those with high credit scores: If you have excellent credit you may be able to hold four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

After we've examined the number of credit cards you're required to have Let's look at how using multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards affect your credit score through a variety of ways for example:

  • Improved credit utilization ratio: Possessing multiple credit card accounts can aid in improving your CUR. It spreads the balances on 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 affect your credit score in these ways:

    • Higher risk of missed payments and delinquencies: Owning a lot of credit cards can increase a higher risk of missing payments. There is also the risk of being in delinquency with your account.
    • Increased credit inquiries and new accounts When you apply for multiple credit cards could lead to multiple credit inquiries and new accounts. Both can impact your credit score.
    • Lower average account age Multiple credit cards can help lower the average age of your accounts. As a result, it could lower your credit score.
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