4 Questions to Ask Before Applying for a New Credit Card

by Maurie Backman | Updated July 21, 2021 - First published on April 28, 2021

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Thinking of adding another credit card to your mix? Hash out these items first.

Some people are content with a single credit card. Others like having multiple cards. If you fall into the latter camp and are thinking of adding another credit card to your collection, be sure to answer these important questions first.

1. When's the last time I applied for a new card?

Applying for too many new credit cards within a short period of time can actually hurt your credit score, making it harder for you to borrow money when you need to. If it's only been a few weeks since you last applied for a credit card, you may want to sit tight for a while, as too many applications at once could be a red flag on your credit report. As a general rule, it's good to wait at least three months between credit card applications, and if you can wait six months, even better. Doing so could increase your chances of getting approved.

2. What fees are involved, and are they worth it?

Some credit cards won't charge you any money just for opening an account, but others come with an annual fee. In some cases, an annual fee can be worth the money, but if you're going to pay one, make sure you'll get enough out of your card for that to make sense. If paying a $95 annual fee scores you $300 more cash back than a comparable credit card with no fee, then you won't really lose money by forking over that $95. But don't sign up to pay a fee unless you're certain you can make your money back. Check out the best no annual fee credit cards before you make your decision.

3. Will I actually benefit from the perks?

A credit card that offers 3% cash back on restaurants won't do you much good if you only dine out a handful of times per year. Similarly, a travel credit card makes little sense if you're on a tight budget and don't expect to take too many trips in the near term. It's easy to get excited over a credit card with a great rewards program, but make sure you're actually likely to rack up those rewards. That said, if you do love to travel, look at travel rewards credit cards before you add a new card to the mix.

4. Will I struggle to claim my sign-up bonus?

Some credit cards offer a sign-up bonus for charging a certain amount within a short period after opening an account. For example, you may see an offer for $150 cash back if you spend $1,000 within three months of becoming a cardholder. Sign-up bonuses are a great way to score extra money, but only if you plan to spend enough to snag those bonuses naturally. If you have to force yourself to spend extra money just to claim a sign-up bonus, you won't come out ahead financially. Quite the contrary -- you could end up losing money rather than gaining it.

Credit card companies are constantly putting out new offers, so from time to time, you may be tempted to sign up for one. But before you do, make sure to run through these questions. That way, you'll be less likely to sign up for the wrong card, or the right card at the wrong time.

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