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The Personal Finance Podcast
How Many Credit Cards Should I Have? - Money Q&A
Sep 16, 2024
Discover the ideal number of credit cards to optimize your financial health while navigating credit scores. Learn how personal expenses might affect business cards, and demystify capital gains tax during retirement. Gain insights on detecting data breaches to protect your personal information. Explore maximizing credit card rewards and offers to boost savings. This episode is packed with practical tips to master your money management skills!
35:33
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Quick takeaways
- Maintaining two to four credit cards can optimize credit scores by lowering utilization ratios and enhancing payment history.
- Properly distinguishing personal and business expenses on credit cards is crucial to avoid complications during IRS audits and ensure effective bookkeeping.
Deep dives
Optimal Credit Card Numbers
The discussion on how many credit cards to have reveals that a range of two to four cards is generally considered optimal for most people. With four cards, one can lower their credit utilization ratio by distributing their spending, which positively impacts their credit score. Maintaining a good payment history and having a longer credit history are also crucial, as payment history constitutes 35% of the credit score while the length of credit history accounts for 15%. Therefore, while having multiple cards can offer benefits, users should be strategic about keeping only as many as they can effectively manage, especially if they are not heavily into travel hacking or maximizing rewards.
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Discover
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Listen to the best highlights from the podcasts you love and dive into the full episode