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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 question that boggles people in personal finance is "How many credit card should I get?" This question becomes particularly pertinent if you are contemplating adding tradelines to your credit report. Let's take a look at this topic from a different angle 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 card you use isn't just an issue of personal convenience. It also influences the credit score. While you're aware that a credit line can help your credit score, you're probably puzzled as to how many you should have.

The Pros and Cons of Owning Multiple Credit Cards

Before we discuss the number of credit cards you should own First, let's take a look at the benefits and downsides that come with having multiple credit cards.

Advantages of Owning Multiple Credit Cards

  • If you own multiple credit cards your credit limit will be higher. A credit limit of high amount is beneficial for emergency expenses or large purchases.
  • Use credit cards with rewards and cashback program to cut costs when you purchase things on a daily basis.
  • Your ratio of credit utilization will improve. The credit utilization ratio refers to the amount of credit available that you currently use. Credit cards with multiple accounts can improve your credit score by splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards can increase your chances to spend too much and end up in debt.
  • It's easy for people to make unplanned purchases that you're not able to pay for when you're juggling multiple credit cards.
  • Controlling multiple credit cards can require long and time. It is even more difficult if the payment schedules change.
  • More cards can result in very high utilization of credit. A high CUR could harm your credit score.
  • Different cards have different benefits. If you have too many cards, you risk missing out on many benefits.
  • On the flip side the other hand, having too many cards can make keeping track on payment due dates a challenge. It can result to late fees and a damaged credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diversity of Benefits Find cards that provide a variety of perks, such as travel rewards, cashback, or low-interest rates.
  2. Annual Fees: You must ensure the card's benefits surpass any annual costs.
  3. Interest Rates: A lower APR is vital unless that you'll finish the balance every month.
  4. Credit Limit: A higher credit limit can help improve your credit utilization ratio, if you don't exceed it.

Average Number Credit Cards Should I Have

After looking at the pros and cons of having multiple credit cards, let's look at how many credit cards to get. How many credit card accounts is too much? And how many are enough?

Financial experts suggest having 3 to 5 credit card accounts to ensure a well-rounded credit profile. This gives you many benefits and helps improve 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 how many credit cards to own. These include:

  • Credit score and past history: Your credit score and past history determine how many credit cards to have. You could only qualify for a couple of credit cards, if you have an unsatisfactory credit score or have a poor credit record.
  • Costs and income: Your income and expenses will also be vital. If you've got a high income and very low expenses, it is possible to be able to handle more credit card debt than someone with a lower income and higher expenses.
  • Priorities and goals for your financial life Your financial goals and priorities will affect the number of credit card you should possess. If you're looking for ways to improve your credit score or earn rewards, think about owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

Here are some recommended numbers of credit cards that are based off of different scenarios:

  • For people who do not have credit history If you're not creditworthy, you might be eligible for one or two credit cards.
  • For people with average credit scores If you have an average credit score, you could own two or three credit cards.
  • For those with outstanding credit scores: If you have excellent credit you could have at least four credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

Now that we have looked at how many credit cards you're supposed to have We'll 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 positively impact your credit score in a variety of ways including:

  • Increased credit utilization ratio: The fact that you have multiple credit cards can aid in improving your CUR. The spreads 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

A number of credit cards on your account can impact your credit score the following ways

    • Risk of missed payments and delinquencies: Owning a lot of credit card accounts could lead to an increased chance of missing payments. There is also the risk of becoming indebted on your accounts.
    • More credit inquiries and new accounts The application process for multiple credit cards can create multiple credit inquires and new accounts. Both of these could lower your credit score.
    • A lower average age for your account Multiple credit card accounts can help reduce the age average of your accounts. As a result, it could affect your credit score.
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