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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 regards to personal finance is "How many credit card should I get?" This question becomes even more relevant when you are considering the addition of tradelines to your credit report. Let's demystify this topic by providing you with the facts and guidance to make shrewd financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit or debit cards you use is not just an issue of personal comfort. It also affects the credit score. While you know that having credit cards can help your credit score, you're probably uncertain about the amount you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we go into the number of credit cards you need to have let's look at the benefits and downsides that come with having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're a credit card holder with multiple cards the credit limit may be greater. A credit limit that is high is handy for emergencies or large purchases.
  • Make use of credit cards that have rewards as well as cashback to save when you purchase things daily.
  • Your credit utilization ratio will improve. Your credit utilization number refers to the percentage of your available credit that you are currently using. A variety of credit cards can boost your credit score by dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards could make it more likely to overspend and fall into debt.
  • It's easy to make impulse purchases that aren't affordable when you have multiple credit cards.
  • Controlling multiple credit cards can require some time and energy. More so if the payment schedules change.
  • In addition, more cards could result in excessive credit utilization. A high CUR could harm your credit score.
  • Different cards have different benefits. Insufficient cards mean losing out on a variety of benefits.
  • On the flip side the other hand, having a lot of cards can make tracking payment due dates challenging. It can result in overdue fees and damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diversity of Benefits: Look for cards that have advantages, such as cashback, travel rewards, or low-interest rates.
  2. Annual Fees It is important to make sure the card's benefits surpass annual fees.
  3. Interest Rates The APR should be low. essential unless that you'll have enough money to pay off the balance every month.
  4. Credit Limit: A higher credit limit could improve your credit utilization ratio, so long as you don't use it to the max.

Average Number Credit Cards Should I Have

After having looked at the advantages and disadvantages of owning several credit cards, let's think about the number of credit cards you should be carrying. What is enough? And how many are enough?

Financial experts recommend having between 3 and 5 credit card accounts to ensure a well-rounded credit history. This can offer a variety advantages and can improve the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

There are a variety of factors to consider when deciding on the number of credit cards you have. These include:

  • Credit score and past history: Your credit history and score will dictate how many credit cards you can have. You may only qualify for a couple of credit cards, if have poor credit scores or a credit history that is not as good.
  • In addition to your expenses, your income and expenses can be important. If you have a high income and little expenses, you are able to have more credit card accounts than someone with a lower income and higher expenses.
  • Financial goals and priorities The goals you have for your finances and the priorities will determine how many credit cards you should possess. If you want to improve your credit rating, or earn rewards points, you should consider owning a number of credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For people with no credit history: If you are not able to establish credit, you may be eligible for one or two credit cards.
  • For people who have average credit scores If you're averaging credit score, you could own two or three credit cards.
  • For those with outstanding credit scores: If you have excellent credit scores you could have at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

After we've discussed how many credit cards to get Let's take a look at how applying multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Multiple credit card accounts can affect your credit score by a variety ways that include:

  • Improved credit utilization ratio: Possessing multiple credit card accounts 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

Possessing multiple credit cards can negatively impact your credit score the following ways:

    • Greater risk of not paying and delinquencies: Owning a lot of credit card accounts could lead to the risk of having to miss payments. Also, there is a chance of becoming indebted to your credit card accounts.
    • New credit inquiries and increased credit accounts Application for multiple credit cards could create multiple credit inquires and new accounts. Both of these could lower your credit score.
    • A lower average age for your account Multiple credit cards can reduce the average age of your accounts. In turn, it can affect your credit score.
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