Home > Credit Cards > Should You Get Another Credit Card? Ask Yourself These 5 Questions First

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Credit cards play a significant role in your financial life—from establishing credit to determining your buying power and more. While credit cards have become an integral part of society and even have their perks, you may be wondering how many credit cards you should keep and if it would be wise to get another one.

Before you decide to add another credit card to your wallet, there are some things that you will want to consider. Find out if applying for additional credit cards makes sense by asking yourself these five questions first. 

How Long Have You Been a Credit Card Holder?

If you are a new credit card holder, it can take six months to a year to see an effect on your credit score. Without an established credit history, it may be difficult for lenders to decide whether to extend credit to you. A short credit history can also impact your interest rates, keeping them higher than desirable. If you have had your credit card for less than a year, getting a new one may not be the best choice right now.

What to do: Be patient. When using the credit cards you already have, pay on time and in full each month so that future credit card companies will see how responsible you are and will be more likely to extend you credit with a good interest rate. If you are a new credit card holder, try holding off for one year before applying for another credit card.

How Are You Managing Your Current Credit Cards?

It may be tempting to have more spending power at your disposal, but before you apply for another credit card, make sure you can financially handle it. Examine how you are currently managing your credit cards. Are you struggling to pay the minimum each month? Are you unable to make payments on time? If you answer “yes” to either of these questions, it’s probably not a good idea to apply for another credit card right now.

What to do: If you are already struggling, ask yourself why you need to get another credit card. Is it because you don’t have enough cash flow or you have an emergency situation? Instead of making any hasty decisions by opening another line of credit, develop a plan to lower your current credit card balances and create a budget that will help you organize and control your spending.

How Are You Going to Use Your New Credit Card?

When considering a new credit card, it’s important to know what your intentions are and how you are planning to use it. Some reasons for opening a new credit card account may be more impulsive than practical, so think carefully before signing that credit card application. If you plan to use the new card as a backup, most likely you won’t use it often. Some credit card companies have a policy of canceling credit cards due to inactivity, and a canceled credit card can cause your credit score to take a dip.

What to do: Before you decide to apply for a new card that you may not use, use your current cards effectively. Pay your balance on time and in full to build your credit. Some cards even offer cash back rewards that reward smart spending.

What Types of Perks and Rewards Does the Credit Card Offer?

If you have established excellent credit, you may be receiving offers from many different credit card companies claiming perks and rewards galore. If you know that you can financially handle another credit card and are looking to take advantage of some perks that your current credit cards do not offer, you may want to consider another credit card. Before you move forward, do your research on each one.

What to do: Don’t get sucked in by flashy offers that won’t benefit you in the long run. Cash back rewards and frequent flier miles won’t help if you aren’t able to pay your balance or if the cards don’t offer rewards that you can take advantage of. It’s important to make sure that the credit card you choose is the right fit for your needs. Decide which perks are most important to you and would give you the most bang for your buck. 

What Is the Interest Rate?

While you may have every intention of paying off your credit card balance in full every month, sometimes life happens and the only option in the moment is to make minimum payments. Whether it’s the loss of a job or a divorce, many situations can throw you off track financially. High interest rates on credit cards can compound an already stressful situation.

What to do: While some credit cards may hit everything on your perk and benefit checklist, if the interest rate is too high, skip it. Hefty amounts added to your credit card bill every month will only make it that much harder to get out of a tight financial situation should life throw you a curveball. Look for credit cards with low interest rates that will be sustainable for long term use.

Once you’ve examined your reasons for wanting another credit card, you can determine which one is best for you—if any at all! Depending on your needs, you can use Credit.com’s Credit Card Finder to find the right card for you.

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