You’ve had your eye on a new credit card. But is now the right time to apply for it or should you wait? Though this plastic is a fantastic way to build credit when managed properly, there are a few things to think through before submitting that online application. Use our quick guide to make the best decision for your financial needs.
3 considerations before opening a new credit card
1. Your current credit habits
If you’re having a hard time responsibly managing your existing credit cards, adding another one to the mix may not be in your best interest. One exception is if you’re looking into a balance transfer, which allows you to consolidate all your high-interest credit card debt onto one low-rate card. The lower rate makes debt payoff more affordable over the long run. Plus, managing a single account vs. several also makes it less time-consuming.
2. Upcoming financing needs
Applying for a line of credit, like a credit card, will result in a hard pull on your credit. Hard pulls will appear on your credit report and will temporarily lower your score. Though the impact is often minimal, it may be beneficial to hold off on applying for a new credit card if you have an upcoming purchase you plan to finance – such as a house or vehicle. Even a temporarily low score will limit your access to more favorable lending rates or terms. As a result, your monthly loan payment may be more expensive. Schedule credit card applications for further out to score a great rate.
3. The time since your last credit card application
Generally, you should wait 90 days in between credit card applications. But six months is ideal if you can stand waiting longer. As mentioned above, credit card applications will cause your score to dip, resulting in less favorable rate offers on other borrowing products until your score rebounds. This is the case for both loans and other credit cards. With a higher annual percentage rate (APR), any credit card balance you roll over each payment cycle will balloon your balance faster. Over time, this may cause credit card debt to snowball and become less manageable for you to pay off. Instead, wait a bit so you can score a better APR. Then, even if you do have to carry over a balance, the amount of interest you must pay off will be lower.
Some financial institutions even have internal policies in place for credit card applications that limit how many you can submit in a set period. If you exceed this amount, they may automatically decline your application.
If you’ve reviewed the above scenarios and find that now is the right time to open a new credit card, turn to General Electric Credit Union (GECU) for a low rate, enhanced security features, and competitive perks. Our suite of rewards credit cards include:
- Gold.1 Rack up unlimited cash back with GECU’s Gold card.
- Platinum.2 Earn 3x the points at U.S. supermarket and wholesale clubs, 2x the points at gas stations, and 1 point for all other purchases. Points can be redeemed for cash back, travel, merchandise, gift cards, and more!
- Visa Signature®.3 Earn 2x the points on every qualifying purchase. Then, redeem your points balance for gift cards, travel, merchandise, experiences, cash back and more!