How Many New Credit Cards Should You Get in 2021?
by Maurie Backman | Jan. 8, 2021
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The quick answer? It depends.
There are plenty of good reasons to apply for a new credit card this year. Maybe you want to increase your credit limit, or maybe there's a great bonus offer you want to capitalize on. You can apply for new credit cards as your needs change. For example, if you expect to do more traveling this year, it could pay to sign up for a travel rewards card.
But how many new credit cards should you apply for this year? There's no hard-and-fast rule, but, as a general guideline, limiting yourself to a couple of new cards is a wise idea -- though there are exceptions.
The problem with applying for too many credit cards
Each time you apply for a new credit card, it counts as a hard inquiry on your credit record. The occasional hard inquiry will drop your credit score by a few points -- nothing major. But multiple hard inquiries could cause more credit score damage, making it harder for you to get those applications approved.
Plus, too many new credit card applications within a narrow time frame could serve as a red flag that you're borrowing too aggressively and are a higher risk. That's why it's often smart to wait about six months between credit card applications. If you apply more frequently than that, issuers may reject you.
Keep in mind that when it comes to your credit score, it doesn't matter whether you're ultimately approved for a new credit card or rejected. Each application you submit will still result in a hard inquiry on your credit record and tug at your score, so it's important to be cautious when seeking out new cards.
Of course, if you're starting out with a strong credit score, you get a little more leeway when it comes to submitting those credit card applications. Even if a credit card issuer sees that you've recently applied for one or two other cards, if your score is, say, an 820 (which is excellent), you'll likely get approved regardless. But if your score is in the low 600s, which is only considered fair, one recent application could cause another to get rejected.
Get your timing just right
If you're planning to get one or more new credit cards in 2021, it's important to time your applications accordingly. Here are some specific situations to look out for:
- If you're applying for a mortgage, consider holding off on applying for a new credit card until after your loan closes. If your credit score is right on the cusp of being considered excellent, you don't want to knock it down below that threshold. That change could mean getting hit with a higher interest rate on your home loan that you'll be stuck with for the life of your mortgage.
- If your credit score is poor and you're trying to boost it, consider holding off on new applications, or at least make sure you don't apply for a new card more than once every six months.
- If you want to capitalize on a sign-up bonus, be sure to apply right before you expect to incur a big expense. For example, if you're moving in March and know you'll be furnishing a new home in April, you may want to apply for a new card with a sign-up bonus as soon as you close on your mortgage. That way, you can charge your furniture on your card and get that free cash.
No matter what your situation looks like, be mindful when applying for new credit cards this year. You don't want to go overboard, because you could not only hurt your credit initially, but also increase the temptation to spend. And that can be a dangerous thing in itself.
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About the Author
Maurie Backman is a personal finance writer who covers everything from savings to retirement to healthcare. Her articles have appeared broadly on major outlets such as CNBC, MSN, and Yahoo.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
