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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 when it comes to personal finance is "How many credit cards can I use?" This question becomes even more relevant when you are thinking about adding tradelines to your credit score. Let's break down this subject and provide you with the knowledge and direction to make sound financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of cards you hold isn't just a matter of personal convenience. It also affects the credit score. While you know that having credit cards can help your credit score, you're probably not sure how many cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we get into the details of the number of credit card you should own we'll first take a look at the advantages and disadvantages of owning multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you own multiple credit cards, your credit limit can be greater. A higher credit limit is helpful for emergency expenses or large purchases.
  • Use credit card rewards and cashback program to cut costs when you purchase things on a daily basis.
  • The ratio of your credit utilization will rise. Your credit utilization percentage refers to the amount of credit available that you are currently using. A variety of credit cards can increase your credit score through splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards are a great way to increase the likelihood to spend too much and end up in debt.
  • It's easy and convenient to make expenditures that aren't feasible if you have several credit cards.
  • The management of multiple credit cards could take an amount of time and effort. Particularly if the payment schedules differ.
  • A lot of cards can result in the utilization of credit to be high. A high CUR can affect your credit score.
  • Different cards come with different perks. Being too cautious with your cards can result in missing out on diverse advantages.
  • On the flip side having too many credit cards can make tracking payment due dates a struggle. It can lead to high interest and a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Differential Benefits: Find cards that have benefits, including travel rewards, cashback, or low-interest rates.
  2. Annual Fees: Check to ensure that the card's advantages outweigh annual fees.
  3. Interest Rates: A low APR is vital unless you're sure that you'll be able to pay off the balance each month.
  4. Credit Limit: A higher credit limit could boost your credit utilization ratio if you don't exceed the limit.

Average Number Credit Cards Should I Have

After looking at the pros and cons of owning several credit cards, let's think about how many credit cards you should have. How many credit cards are too much? And how many are enough?

Financial experts recommend having between 3 and five credit cards to create an extensive credit profile. This can provide a variety of advantages and boosts 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 cards you have. These factors include:

  • The credit score and the history: Your credit score as well as your past experience will determine how many credit cards you should own. It is possible to only qualify for one or two credit card if you have an unsatisfactory credit score or a poor credit history.
  • Costs and income: Your expenses and income will also be important. If you have a substantial income and low expenses, you may be able to handle more credit card debt than those with lower incomes and higher expenses.
  • Financial goals and priorities Priorities and financial goals will affect the number of credit card you need to own. If you want to improve your credit score and 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 upon different scenarios:

  • For those who have no credit history: If you don't have a credit history, you could be eligible for one or two credit cards.
  • For those with average credit scores: If you're averaging credit score, you might have up to three credit cards.
  • For people with excellent 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 looked at how many credit cards you're supposed to have, let's explore how applying multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards be beneficial to your credit score in several ways which include:

  • Increased credit utilization ratio Having multiple credit cards could assist 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

Multiple credit card accounts can hurt your credit score in the following ways:

    • Higher risk of missing payments and delinquencies: Having many credit card accounts could lead to greater risk of missing payments. There is also a risk of becoming indebted to your credit card accounts.
    • Increased credit inquiries and the opening of new accounts: Applying for multiple credit cards could be the cause of multiple credit inquiry as well as new accounts. Both of them could affect your credit score.
    • A lower average age for your account The use of multiple credit cards can reduce the age average of your accounts. As a result, it can lower your credit score.
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