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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 most frequently asked questions with regards to personal finance is "How how many credit-cards should I carry?" This question becomes even more relevant when you are considering the addition of tradelines to your credit report. Let's decode this issue giving you the insights and guidance to make shrewd financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit card you use is not just an issue of personal convenience. It also influences the credit score. While you're aware that credit cards can help your credit score, you're likely perplexed about how many you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we look at how many credit cards to get let's look at the advantages and disadvantages of owning a variety of credit cards.

Advantages of Owning Multiple Credit Cards

  • If you're a credit card holder with multiple cards and credit limits, they could be greater. A higher credit limit can be useful for emergencies or large purchases.
  • Use credit card rewards or cashback rewards to save some money on things daily.
  • The ratio of your credit utilization will improve. Your credit utilization number refers to the amount of available credit that you currently use. Using many credit cards can increase your credit score through splitting your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards could make it more likely to overspend and get into debt.
  • It's not difficult to make unexpected purchases that aren't affordable when you're juggling multiple credit cards.
  • managing multiple credit card accounts can take time and effort. More so if the payment times are different.
  • In addition, more cards could result in higher credit utilization. A high CUR can impact your credit score.
  • Different cards offer different perks. If you have too many cards, you risk missing out on many advantages.
  • On the other hand having too many credit cards can make tracking payment due dates a struggle. It can result to problems with late fees and a lower credit score.

Key Points to Consider When Applying for Credit Cards

  1. Diverse Benefits Look for cards that come with advantages, such as travel rewards, cashback or low-interest rates.
  2. Annual Fees: Check to ensure that the card's benefits exceed any annual fees.
  3. Interest Rates: An APR that is low is essential unless you're certain that you'll be able to pay off the balance each month.
  4. Credit Limit: A higher credit limit can improve your credit utilization ratio, if you don't exceed the limit.

Average Number Credit Cards Should I Have

After having looked at the pros and cons of having multiple credit card accounts, let's see how many credit card you should have. How many credit cards is too much? And how many are sufficient?

Financial experts recommend having between 3 and 5 credit card accounts to ensure an rounded credit profile. This gives you many advantages and 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 include:

  • Credit score and history Your credit history and score will dictate how many credit cards you should own. You're only eligible for credit cards with one or two points if you have a low credit score or a poor credit history.
  • Costs and income: Your income and expenses will also be crucial. If you're blessed with a higher income and minimal expenses, you might use more credit cards than someone with a lower income and higher expenses.
  • Financial goals and priorities: Your goals in terms of finances and priorities will affect how many credit cards you need to own. If you're looking to boost 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 based around different scenarios:

  • For those who have no credit history If you have no credit history, you might be eligible for one or two credit cards.
  • For people with credit scores that are average: If you're averaging credit score, you might possess two to three credit cards.
  • for those with high credit scores: If you have excellent credit scores, you may hold four or more credit cards.

How Owning Multiple Credit Cards Affects Your Credit Score

After we've looked at how many credit cards you should own, let's explore how applying 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 which include:

  • Better credit utilization ratio: Multiple credit cards can help improve your CUR. It spreads out your balances across several cards.
  • Diversified credit mix: A diversified credit mix can help improve your credit score.

Negative Impact of Owning Multiple Credit Cards on Credit Score

Having multiple credit card accounts can negatively impact your credit score the following ways

    • Greater risk of not paying and delinquencies: Owning a lot of credit cards could result in greater risk of missing payments. There is also a chance of being in delinquency with your account.
    • New and increased credit inquiries as well as new accounts The application process for multiple credit cards can lead to multiple credit inquiries as well as new accounts. Both can lower your credit score.
    • Lower average age of accounts: Owning multiple credit cards can lower the average age of your accounts. In turn, it can affect your credit score.
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