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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 their personal finances is "How many credit accounts should I hold?" This question becomes crucial when you are considering the addition of trade lines to your credit profile. Let's break down this subject by providing you with the information and guideline to make informed financial decisions.

The Conundrum of Credit Card Numbers: Why It Matters

The number of credit-cards you carry is not only a matter of personal convenience. It also affects the credit score. Although you're aware of the fact that having credit cards can improve your credit score, you're probably confused about the number you need to have.

The Pros and Cons of Owning Multiple Credit Cards

Before we discuss the number of credit cards you're allowed to have let's look at the benefits and downsides of owning multiple credit card.

Advantages of Owning Multiple Credit Cards

  • If you're using multiple credit cards your credit limit could be greater. A credit limit that is high is useful for emergencies or large purchases.
  • Use credit cards that reward you and cashback offers to save you money when you buy items on a regular basis.
  • Your credit utilization ratio will increase. The credit utilization ratio relates to the percentage of your credit available that you are currently using. Making use of a variety of credit cards could increase your credit score through dividing your balances.

Disadvantages of Owning Multiple Credit Cards

  • Multiple credit cards could make it more likely to spend more than you can afford and then fall into debt.
  • It's easy for people to make unplanned expenditures that aren't feasible if you have a lot of credit cards.
  • managing multiple credit cards may take some time and energy. In particular, if the payments times are different.
  • The addition of more cards can result in excessive credit utilization. A high CUR can harm your credit score.
  • Different cards come with different perks. A lack of cards can mean not getting all the benefits.
  • On the flip side having too many accounts can make the process of keeping track of due dates a struggle. 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 offer perks, such as travel rewards, cashback or low-interest rates.
  2. Annual Fees Check to ensure that the card's benefits are greater than annual fees.
  3. Interest Rates: Low APRs are important unless you're confident that you'll settle the balance every month.
  4. Credit Limit: A higher credit limit could boost 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 advantages and disadvantages of owning multiple credit cards, let's look at the number of credit card you should have. How many credit cards is too much? And how many are sufficient?

Financial experts recommend having 3 to five credit cards to ensure a complete credit profile. This can provide a variety of benefits and can also help with the credit utilization ratio.

Factors to Consider When Deciding The Number Credit Cards to Own

Many factors should be considered when deciding how many credit cards to hold. These factors include:

  • Credit score and past history: Your credit score and past history determine how many credit cards to have. You can only be eligible for a couple of credit cards, if you have an unsatisfactory credit score or a credit history that is not as good.
  • Budget and income: Your expenses and income will also be crucial. If you're blessed with a higher income and minimal expenses, you might manage more credit cards than someone with a lower income and higher expenses.
  • Priorities and goals for your financial life Your financial objectives and priorities will also influence the number of credit-cards you should have. If you're hoping to improve your credit score and earn rewards, consider owning many credit cards.

Recommended Number of Credit Cards Based on Different Scenarios

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

  • For people with no credit history: If you don't have a credit history, you might qualify for one or two credit cards.
  • For people with a credit score of average If you have an average credit score, then you could have a couple of credit cards.
  • For people with outstanding 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

Now that we've examined how many credit cards you need let's consider how having multiple credit cards affects your credit score.

Positive Impact of Owning Multiple Credit Cards on Credit Score

Possessing multiple credit cards may affect your credit score in a variety of ways which include:

  • Improved credit utilization ratio: Having multiple credit cards could aid in improving your CUR. It spreads out your balances across 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

Having multiple credit card accounts can cause damage to your credit score the following ways

    • Risk of missed payments and delinquencies: having a large number of credit cards can lead to an increased chance of missing payments. Also, there is a chance of becoming delinquent to your credit card accounts.
    • Increased credit inquiry and new accounts When you apply for multiple credit cards can generate multiple credit enquiries as well as new accounts. Both of these could lower your credit score.
    • Lower average age of your account The presence of multiple credit card accounts can lower the age average of your accounts. This could lower your credit score.
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