Ask These 4 Questions Before Applying for a Credit Card in 2023

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  • A new credit card could give you access to great rewards or even a bonus.
  • It's important to get the timing of your credit card application right.
  • You should also consider your financial and debt-related picture before submitting a credit card application.

They're all important ones to tackle.

There may come a point in 2023 when you're tempted to apply for a new credit card, either because you want more financial flexibility or because you're eager to capitalize on a generous rewards program that just got introduced. But before you move forward with a new credit card application in 2023, you should make a point to address these questions.

1. Do I already have credit card debt?

A lot of people are apt to be starting the new year with credit card debt hanging over their heads, especially on the heels of the holiday season. If you have a balance you're carrying forward, though, then you probably want to hold off on applying for a new credit card. After all, you don't need the temptation to spend more and grow your debt rather than whittle it down.

2. Is my credit score in good shape?

You may come across some tempting credit card offers in the new year. But if your credit score is only mediocre, you might struggle to qualify for them. Before applying for a new credit card, it could pay to check your credit score. And if it's not in the best shape, you may want to work on boosting it before you chase a credit card offer.

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3. Is it a good time to go after a sign-up bonus?

You can often snag a sign-up bonus in the course of getting a new credit card. While the value of that bonus might vary from one card to the next, if you meet the spending requirement at hand, you can often walk away with a nice pile of cash back or reward points as a new cardholder.

But the spending requirements to snag a sign-up bonus can be tough to meet. You might, for example, have to rack up $3,000 in charges within three months to snag your bonus. So it's important to apply for a credit card with one of these bonuses at a time when you're making extra purchases, such as if you're booking a vacation or furnishing your home. If you don't time your application just right, you might force yourself to spend extra to snag a bonus, thereby not really benefiting financially.

4. Have I compared different credit card offers?

As a general rule, it's not a great idea to apply for multiple credit cards in short order. That's because each time you apply for a new credit card, a hard inquiry is done on your credit report. Each individual inquiry along these lines could take your credit score down by five to 10 points, so while a single hard inquiry isn't such a big deal, three or four within the same few months could cause more damage.

Since it's ideal to space out your credit card applications, before you submit one, research different options to make sure you're going after the best offer that's available to you. You may, for example, be interested in a travel rewards credit card if you intend to take more flights in 2023. But in that case, you should look at different travel reward cards rather than jumping on the first appealing offer you see.

A new credit card could open the door to great rewards, a nice bonus, and a host of ongoing perks in the new year. But before you apply for one, think about whether the time is right and ensure you're making the best financial choice.

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