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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 biggest questions that people have in personal finance is "How many credit card should I get?" This question becomes crucial when you are contemplating adding trade lines to your credit profile. Let's break down 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 the result of personal convenience. It also influences your credit score. While you know that having credit cards can boost your credit score, you're likely confused about how many credit cards you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we get into the number of credit cards you should have, let's first look at the advantages and disadvantages of owning a variety of credit cards.

Advantages of Owning Multiple Credit Cards

  • If you've got multiple credit cards your credit limit might be greater. A high credit limit is ideal for emergencies and large purchases.
  • Use credit card rewards or cashback programs to reduce your expenses on things on a daily basis.
  • Your ratio of credit utilization is likely to increase. Your credit utilization ratio is a reference to the amount of credit available that you currently use. A variety of credit cards can improve your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more prone be tempted to overspend or go into debt.
  • It's simple to make unplanned purchases you can't afford when you're using a variety of credit cards.
  • Controlling multiple credit cards can take long and time. It is even more difficult if the payment timings differ.
  • In addition, more cards could result in high credit utilization. A high CUR can affect your credit score.
  • Different cards offer different perks. The lack of cards means missing out on many benefits.
  • On the other hand it is possible that having too many cards can make the process of keeping track of due dates a challenge. It can result in high interest and a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Differential Benefits: Look for cards that offer various benefits, including travel rewards, cashback or low-interest rates.
  2. Annual Fees Be sure that the card's benefits surpass any annual costs.
  3. Interest Rates Lower APRs are essential unless that you'll be able to pay off the balance every month.
  4. Credit Limit: A higher credit limit can help your credit utilization ratio as long as that you don't max it out.

Average Number Credit Cards Should I Have

Now that we've looked at the pros and cons of using multiple credit cards, let's consider how many credit card you should have. How many credit cards is too many, and how many are enough?

Financial experts suggest having between 3 and 5 credit cards to have an overall credit profile. This gives you many advantages and can improve the ratio of credit utilization.

Factors to Consider When Deciding The Number Credit Cards to Own

A variety of factors should be considered when deciding on the number of credit cards to have. These include:

  • The credit score and the history Your credit score and past history determine the number of credit cards you can have. You're only eligible for one or two credit cards if you have low credit scores or a less than stellar credit history.
  • Earnings and expenses: Your earnings and expenses will be crucial. If you have an excellent income and minimal expenses, you might manage more credit card payments than someone with a lower income and higher expenses.
  • Financial goals and priorities Priorities and financial goals will also determine how many credit cards you can own. If you're looking at improving your credit score and earn rewards, think about owning a number of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For those with no credit history If you don't have a credit history, you might qualify for one or two credit cards.
  • For those with a credit score of average If your credit score is average, you could have up to three credit cards.
  • For people with excellent credit scores: If you have excellent credit scores you could have four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have examined how many credit cards you should have let's consider how having multiple credit cards can affect your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit cards affect your credit score by a variety ways and include:

  • Improved credit utilization ratio: The fact that you have multiple credit cards can assist in improving your CUR. It spreads out your balances over 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 cards may harm your credit score in the following ways

    • Greater risk of not paying and delinquencies: Owning a lot of credit cards could result in an increased risk of avoiding payments. Also, there is a chance of becoming indebted with your account.
    • Increased credit inquiries and new accounts Credit card applications for multiple cards could result in multiple credit inquiries as well as new accounts. Both of these can affect your credit score.
    • Lower average age of your account Multiple credit cards can lower the average age of your accounts. As a result, it could affect your credit score.
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