3 Signs You're About to Open the Wrong Credit Card

Here's how to avoid getting a credit card that doesn't serve you well.

From time to time, you may be tempted to open a new credit card. Maybe you want to increase your total spending limit (which, incidentally, can help your credit score). Or maybe you just want to capitalize on an attractive offer. But if you're going to get a new credit card, it should be one that really serves your needs. Here are a few signs that a given card isn't the right one for you.

1. It charges a fee you likely won't get back in the form of rewards

Paying an annual fee for a credit card isn't always a bad thing. Sometimes, in exchange for that fee, you'll get extra rewards that more than make up for it. But if a card's annual fee won't pay for itself, then it's a card you shouldn't open. There are so many great cards with attractive reward programs that don't charge you a cent for the privilege of opening an account.

2. Its rewards program doesn't align with your spending habits

A lot of credit cards offer generous reward programs. You may, for example, come across a travel card that offers bonus air miles that are easy to accrue. Or there may be a card that offers far more cash back on gas fill-ups than other cards. Rather than get caught up in the excitement of a generous offer, make sure that offer is one you'll actually benefit from. If it isn't, then the card in question isn't great for you.

In these examples, a card offering extra cash back on gasoline purchases isn't so wonderful if you work remotely for most of the week and aren't doing a lot of driving. And while extra air miles may be good to acquire, if your schedule or budget makes it so you don't travel much, then you may want to focus on a rewards program that will better enhance your life in the near term.

3. It has a sign-up bonus you'll probably have a hard time snagging

Many credit cards offer attractive sign-up bonuses that can put cash back in your pocket. For example, you may come across an offer that gives you $500 cash back for spending $3,000 within three months of opening a given card.

That's a good offer in theory. But if you think spending that much money on a new card over three months is a stretch, then it's a bonus not worth going after. Chances are, either you won't spend enough to claim your bonus, or you'll spend money needlessly just to snag it. In that scenario, you may be better off applying for a sign-up bonus credit card that offers a $200 bonus for spending $1,500 over three months.

It's important to be strategic when signing up for a new credit card. If any of these signs apply to you, you may want to take your business elsewhere.