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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 accounts should I hold?" This question becomes even more pertinent when you are considering the addition of tradelines to your credit profile. Let's simplify this subject 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 only a matter of personal convenience. It also affects the credit score. Although you're aware that having a credit card can benefit your credit score, you're probably not sure how many cards you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we begin to discuss the number of credit cards to get we'll first examine the advantages and disadvantages that come with having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you are a holder of multiple credit cards your credit limit might be higher. A high credit limit is beneficial for emergency expenses or large purchases.
  • Make use of credit cards that have rewards and cashback offers to save you money when you buy items on a regular basis.
  • The ratio of your credit utilization is likely to increase. Your credit utilization number refers to the amount of credit available that you are currently using. Credit cards with multiple accounts 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 overspend and enter debt.
  • It's easy and convenient to make purchase that you cannot afford if you have many credit cards.
  • Managing multiple credit cards can require an amount of time and effort. More so if the payment schedules vary.
  • More cards could lead to very high utilization of credit. A high CUR could harm your credit score.
  • Different cards have different benefits. The lack of cards means missing out on diverse advantages.
  • On the other hand having too many accounts can make the task of calculating payment due dates difficult. It can result in overdue fees and damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits: Find cards that offer benefits, including travel rewards, cashback, or low-interest rates.
  2. Annual Fees Make sure the card's rewards outweigh any annual charges.
  3. Interest Rates A lower APR is essential unless you're certain that you'll have enough money to pay off the balance every month.
  4. Credit Limit: A higher credit limit can improve your credit utilization rate, if you don't max it out.

Average Number Credit Cards Should I Have

After having looked at the advantages and disadvantages of having multiple credit cards, let's consider the number of credit cards you should be carrying. How many credit card accounts is too many, and how many are enough?

Financial experts recommend having between 3 and 5 credit cards to have a well-rounded credit profile. This can offer a variety advantages and also improves the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

There are many factors to take into consideration when deciding on the number of credit cards to hold. These factors include:

  • The credit score and the history Your credit score and history will determine how many credit cards you are eligible for. You are only eligible only for one or two credit accounts if you have a low credit score or a poor credit history.
  • Costs and income: Your expenses and income will also be crucial. If you're blessed with a higher income and low expenses, you could manage more credit card payments than someone with a lower income and more expenses.
  • Priorities and financial goals The goals you have for your finances and the priorities will also affect the number and type of credit cards you need to own. If you want to improve your credit score or earn rewards, you should consider owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some suggested numbers of credit card numbers based on different scenarios:

  • for those with no credit history: If there is no credit history for you, you could be eligible for one or two credit cards.
  • For people with a good credit score: If your credit score is average, you might be able to have three or more credit cards.
  • for those with high credit scores: If you have excellent credit you can have at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

After we've examined the number of credit cards to get let's examine how applying multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Possessing multiple credit cards may have a positive effect on your credit score in different ways in which they include:

  • Improved credit utilization ratio The fact that you have multiple credit cards can assist in improving your CUR. It spreads out 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 credit cards can create greater risk of missing payments. There is also a chance of becoming delinquent on your accounts.
    • Increased credit inquiries and the opening of new accounts: Applying for multiple credit cards can generate multiple credit enquiries and new accounts. Both can impact your credit score.
    • Lower average age of your account Multiple credit cards can lower the age average of your accounts. This could affect your credit score.
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