3 Reasons Not to Open Another Credit Card This Year

by Maurie Backman | Published on Oct. 27, 2021

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Before you fill out a credit card application, consider these potential issues.

Opening a new credit card could work to your benefit under the right circumstances. For example, some credit cards offer generous sign-up bonuses, and opening a new one could put a pile of cash in your pocket. Plus, different cards offer different reward programs, and if you plan to do a lot of holiday shopping, you may be considering another credit card to make those purchases.

But in some cases, opening a new credit card can hurt you financially. If these scenarios apply to you, you may not want to open another credit card this year.

1. Your current cards are maxed out

Sometimes, people max out their credit cards because emergency expenses arise and they don't have money in savings to cover those surprise costs. In other cases, maxed-out credit cards can indicate that those cards aren't being managed closely. And if the latter applies to you, then getting another credit card will open the door to temptation -- and could land you deeper in debt.

A better bet? Get a handle on your existing balances before adding to them. Don't open another card until your debt has shrunk.

2. You already have a lot of credit cards

You may not be carrying a balance on any of your credit cards. But you may still want to hold off on getting another if you already have many credit cards.

One factor in calculating your credit score is your credit mix, an assessment of the types of credit accounts you have open. If you have too many credit cards, lenders may believe you're too reliant on those cards, even if that's not actually the case. And you may get denied another type of loan or a new credit card as a result.

3. You plan to apply for a mortgage and don't have the best credit score

It takes a minimum credit score of 620 to qualify for a conventional mortgage, though some lenders impose higher credit score requirements. If your score is only a notch above the minimum needed, and you hope to get a mortgage in 2021, you shouldn't apply for any new financing this year, including a credit card.

Each time you fill out a loan or credit card application, the issuer does a hard inquiry on your credit history. A single hard inquiry generally isn't considered terrible, as it usually only brings a five- to 10-point drop in your credit score. But if that's a hit you can't afford right now, you're better off sticking with the credit cards you have.

It can be tempting to sign up for a new credit card, especially when great offers present themselves. But in these situations, you're better off not adding another credit card to your mix.

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