Here's a Better Approach to Applying for Credit Cards

by Maurie Backman | Updated July 21, 2021 - First published on Feb. 4, 2021

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Before you rush to fill out those applications, do these three things.

Signing up for new credit cards can be tempting, especially when great offers seem to just keep coming. And if you have a great credit score, you may be even more inclined to jump on those offers. After all, you're more likely to get approved when you have a little leeway with your credit. And a hard inquiry on your credit record for a new application won't really hurt if your score is already in the 800s.

But opening too many new credit cards at once is a bad idea. For one thing, it can damage your credit score and make you seem like more of a credit risk. Secondly, it can open the door to added spending, thereby increasing your risk of landing in expensive debt. Rather than apply for credit cards blindly, take these steps first.

1. Assess your spending needs

Credit card offers like bonus cash back for different purchases can be very appealing. But if you don't buy the items that are eligible for the extra cash, you won't be doing yourself any favors. Say there's a credit card that offers 3% back year-round on gas and groceries. If you work from home most of the time and therefore don't do many fill-ups, or you live alone and don't spend a lot at the supermarket, then that's a silly card to get.

2. See if the timing is right

Some credit cards offer sign-up bonuses with a certain amount of cash back for spending a specific amount shortly after opening your card. For example, you may be eligible for $500 cash back if you spend $3,000 within three months of opening a new credit card account. That might be a good deal so long as you're not having to make extra purchases just to snag that bonus. That's why you need to consider the timing of your applications. If you travel during the summer, open a sign-up bonus card around that time, not during the winter when your family tends to stay home. That way, you're more likely to meet that $3,000 spending threshold.

3. See if you're really getting the best offer

A sign-up bonus of $500 for spending $3,000 within your first three months of opening a new card is a sweet deal. But what if there's a card out there that will give you $500 cash back for spending $1,500 within three months? Similarly, you may be tempted by a card offering 2% back on restaurants, but if there's a card offering 3% or 4% on dining, that's a better offer. The point? To maximize your rewards, research different options before jumping on credit card offers.

Scoring a great deal on a credit card often boils down to a little patience and strategy. There are plenty of solid offers available today. You just have to take the time to apply for new cards at the right time and focus on the cards that really align with your spending habits and needs. Be aware that there's a limit on how many credit cards you can open at once before it begins to negatively impact your credit score. And some card issuers will limit you on new cards within a certain time frame. So think carefully before signing your name on those applications.

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