Please ensure Javascript is enabled for purposes of website accessibility

6 Reasons Why Americans Open Credit Cards

By Maurie Backman – Apr 27, 2018 at 6:22AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Hint: They're mostly good ones.

For better or worse, credit cards are an integral part of our economy. It's estimated that 70% of Americans have at least one credit card, which translates into 174 million users. Given that number, Credit Cards Explained conducted a survey to see what motivates consumers to open new credit cards, and the results were mostly encouraging:

Reason for Opening Credit Card

Percentage of Consumers

Improve credit score or history


Earn cash back


Earn travel rewards


Earn store rewards


Maxed out a previous card


Earn a signup bonus



If you're thinking of opening a credit card, it's crucial to do so for the right reasons. Otherwise, that card might spell nothing but financial trouble.

Pile of credit cards


Good reasons to open a credit card

The most popular reason for Americans opening credit cards is a positive one. When used correctly, a new credit card can actually improve your credit score in a number of ways. First, if you make charges on that card but pay your bills on time every month, you'll boost your payment history -- the single most important factor in determining a credit score. You'll also help your credit utilization ratio by increasing your credit limit.

Rewards are another great reason to open a credit card, provided you use that card only to buy things you were already planning on purchasing. Cash back is the most popular reward type because it gives you limitless options. If your credit card company sends you a check for the amount you've accrued in rewards, that money is yours to spend as you see fit. You can use it to pay off debt, contribute to an emergency fund, or meet whatever other needs you have.

Similarly, signup bonuses are a great thing provided they don't tempt you to spend money you weren't planning to spend. But since most of us have basic expenses that can be charged on a credit card, like groceries and gasoline, snagging those bonuses is often quite easy.

And one very bad reason to open a credit card

While most of the aforementioned reasons for opening a credit card make sense, one very bad reason to get a new credit card is if you already have maxed out your other ones. If you're in this position, it's a sign that you shouldn't have a credit card to begin with because you can't be trusted to use it responsibly.

Most people are granted credit limits that are higher than what they should actually be spending based on their income. Therefore, if you've already managed to max out at least one credit card, it's a sign that you're at risk of repeating that mistake. If that's the boat you're in, rather than open a new credit card, you instead should focus on paying down your current one.

Remember, if you max out a credit card and carry that balance for an extended period of time, you'll not only spend extra money on interest, but possibly drive up your credit utilization ratio, which can negatively impact your score. Granted, opening a new card should increase your total line of credit, thus helping that ratio initially, but if you max out that additional card, you'll be back where you started.

Ultimately, it takes a certain type of discipline to have a credit card. If you can't trust yourself not to spend excessively and max out its limit, then you're better off forgoing those rewards and paying for purchases in cash. It's a far better bet than racking up expensive interest charges, ruining your credit, and setting yourself on a disastrous financial path.

The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.