Should You Apply for a New Credit Card Ahead of the 2021 Holidays?

Here's how to know if a new credit card makes sense for you.

There's a danger in having too many credit cards -- the more you open, the higher the spending limit you have. And that could lead you toward debt.

But with the holiday season approaching and spending about to ramp up, it could pay to add a new credit card or two to your arsenal. Answer these key questions to know if it makes sense to get another credit card.

1. Am I eligible for money-saving travel rewards?

Many of us do a lot of traveling during the holidays. If you don't have a travel rewards card, it could pay to apply for one now and use it to book upcoming travel.

Many travel reward cards offer built-in perks that make flying less expensive. You might, for example, find a card that will allow you to check baggage on flights for free. Plus, the right card might make it easier to rack up more cash back or air miles in your travels, making future trips less expensive.

2. Am I getting a decent amount of cash back?

Credit card reward programs vary. But if you're only getting minimal cash back from your current cards, you may want to think about adding a new card to your mix.

Now's a good time to compare reward programs, especially if you think you'll also spend more time during the holidays hitting the road, dining at restaurants, or hosting family meals. Some cards, for example, give generous cash back for grocery store purchases, and those extra rewards could really add up.

3. Could I use a sign-up bonus?

Getting a lump sum of cash could make it easier to swing your holiday expenses. If you know you'll spend more than usual in the coming months on gifts, decor, parties, and other holiday-related items, then it may be a good time to apply for a credit card with a sign-up bonus.

Say you have your eyes on a new card that offers $500 cash back for spending $3,000 within three months of opening your account. If you normally only spend $800 a month on a credit card, you might struggle to meet that spending limit. But if you expect to spend an extra $700 on holiday purchases this year, hitting that limit may be a breeze. And that way, you get a pile of cash to help offset your extra spending.

That said, if you're going after a sign-up bonus, make sure the spending threshold is within reach. You're better off applying for a card with a smaller bonus that won't require you to spend more than you truly need to.

A new credit card could make your holiday expenses more manageable. But if you apply for a new credit card ahead of the holidays, be sure it's the right one. Take a little time to research offers and compare cards to reap the most benefits.