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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 with regard to their finances is "How many credit cards do I need?" This question becomes particularly pertinent if you are contemplating adding trade lines to your credit profile. Let's dispel this nagging issue and provide you with the knowledge and guidelines to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit or debit cards you use isn't just an issue of personal convenience. It also affects the credit score. While you know that having a credit line can help your credit score, you're likely in a state of confusion about how many cards you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we discuss the number of credit cards you need to have before we look at the benefits and downsides of owning multiple credit card.

Advantages of Owning Multiple Credit Cards

  • If you are a holder of multiple credit cards the credit limit may be higher. A higher credit limit can be useful for emergencies or large purchases.
  • Use credit card rewards and cashback program to cut costs when you buy things on a daily basis.
  • Your credit utilization ratio will improve. Your credit utilization number refers to the percentage of your credit available that you are currently using. Utilizing multiple credit cards may increase your credit score through dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can make you more prone to overspend and go into debt.
  • It's simple to make unplanned purchases that aren't financially feasible when you have multiple credit cards.
  • Making multiple payments with credit cards can require much time and effort. Particularly if the payment times are different.
  • More cards could lead to higher credit utilization. A high CUR could harm your credit score.
  • Different cards provide different perks. With too few cards, you risk not getting all the advantages.
  • On the flip side it is possible that having too many cards can make keeping track of payment due dates challenging. It can lead to charges for late payments as well as a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Differential Benefits: Look for cards that provide various perks, such as travel rewards, cashback or low-interest rates.
  2. Annual Fees: Check to ensure that the card's benefits surpass the annual fee.
  3. Interest Rates It is crucial unless you're confident that you'll repay the balance each month.
  4. Credit Limit: A higher credit limit could improve your credit utilization rate, if that you don't go over it.

Average Number Credit Cards Should I Have

Now that we've looked at the pros and cons of using several credit cards, let's think about the number of credit cards you should have. How many credit cards are excessive, and how many are enough?

Financial experts recommend having 3 to 5 credit cards to have a well-rounded credit history. This gives you a variety of benefits and helps improve 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 on the number of credit cards you have. These include:

  • Credit score and history: Your credit history and score will dictate how many credit cards you should own. You are only eligible to apply for one or more credit cards if you have a low credit score or a less than stellar credit history.
  • Costs and income: Your earnings and expenses will be crucial. If you have a high income and minimal expenses, you might manage more credit cards than someone with a lower income and higher expenses.
  • Priorities and financial goals Your goals in terms of finances and priorities also determine how many credit card you should possess. If you're looking to improve your credit score, or earn rewards, consider having several credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For those with no credit history: If there is no credit history for you, you might qualify for one or two credit cards.
  • For people with average credit scores If your credit score is average, you might own two or three credit cards.
  • For people with excellent credit scores: If you have an excellent credit score you could be the owner of at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

After we've discussed how many credit cards you're required 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 could affect your credit score in various ways, including:

  • Improved credit utilization ratio The fact that you have multiple credit cards can assist in improving your CUR. It 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 cards may negatively impact your credit score the following ways

    • Higher risk of late payments and delinquencies credit cards can increase an increased risk of avoiding payments. Also, there is a chance of becoming indebted with your account.
    • More credit inquiries and new accounts When you apply for multiple credit cards can lead to multiple credit inquiries as well as new accounts. Both of these could lower your credit score.
    • Lower average age of accounts Possessing multiple credit cards can help lower the average age of your accounts. In turn, it could affect your credit score.
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