4 Signs You Aren't Ready for a Credit Card

A credit card can be a great tool. It can be more convenient to pay with a credit card than always having to get cash out of your bank account. You can also earn rewards like miles or cash back when you use your card. And, as you use your card, you can develop a positive payment history. This will help you earn a good credit score.

But not everyone should have a credit card. You need to make sure you're ready for one before you apply. Before you move forward, look out for these four signs that getting a card isn't the right move for you. 

1. You don't have your spending under control

If you don't have good control of your spending, you are not ready to get a credit card. That's because the risk of getting deeply into debt is too great. 

The average credit card interest rate was 20.68% as of July 10, 2023, according to the Federal Reserve. If you cannot pay your balance off in full each month because you overspent on your card, you'll make each purchase a lot more expensive. You'll also find yourself struggling more to live within your means in the future once your income is eaten up by credit card payments and high financing charges. 

2. You can't count on yourself to make payments on time 

You don't want to be late paying for your credit card bill because that would be reported to the credit reporting agency and your credit score could take a hit. Even a single late payment could bring your score down by as much as 110 points if you previously had good credit. 

You could also find yourself facing late fees and being charged a penalty APR if you don't pay your credit card on time. This will make your card even costlier. 

3. You already have a lot of other debt you're working on paying down 

If you are already working on paying down a lot of debt, you may not want to add another credit card to the mix. Before taking the risk of incurring additional debt, it makes sense to try to repay the debt you already owe. You should be sending extra payments to your current debt, rather than giving yourself a new way to become indebted to a credit card company. 

4. You'll soon be applying for another big loan

Finally, if you are going to be applying for another big loan soon -- like a car loan or a mortgage -- you shouldn't be getting a credit card right now. Doing so could hurt your credit score by reducing your account age, which is a key factor when your score is determined. It could also make lenders fear that you are going on a borrowing spree which would make them less likely to approve your loan. 

If you have any of these four red flags that suggest you aren't ready for a credit card, don't be discouraged. Just keep working on getting your finances under control or paying down your existing debt and revisit the issue once that's done to see if it's a better time to apply for credit.