Suze Orman Says to Answer These Questions Before Getting a New Credit Card

If you're thinking about a new credit card, you may want to read this advice from a top finance expert.

There are many different credit cards available that you could sign up for. You don't want too many cards to manage, though, as this could lead to lots of debt or missed payments. You also want to make sure you're selecting the right cards for your needs.

Since it's smart to make informed choices about applying for a new card, you may want to consider following this advice from finance expert Suze Orman and asking yourself a couple key questions before deciding to move forward with getting more credit. 

1. Is it really necessary to get a new card?

The first thing Orman wants you to do before applying for new credit is to take a look at the big picture and determine what your motivations are for applying for it. 

"I want everyone to have at least one credit card to help build a solid credit score. The goal is to use that card for a few expenses each month that you know you can pay in full. That’s it. So if you already have that card and maybe a backup card, why are you interested in another card?" Orman asked on her blog. 

Orman said that if the purpose of getting the new card is to pay for things that you want, but do not really need, then you should pass up the opportunity. However, she said that if you're concerned about being able to fund necessities, then this is a different situation where it might make sense to apply. 

Orman is definitely right in warning that you shouldn't get a card just to fund purchases that are out of your budget. But in cautioning readers that you should only have cards for building credit, she ignores other possible valid reasons for getting new credit. 

For example, if you're signing up for a new card because it offers generous rewards for purchases you're going to make and pay for in full, then moving forward may make sense as long as you're confident you won't spend irresponsibly. 

2. What will happen after you've had the card for more than a year?

The second big thing Orman urges you to look at before applying for a new card is what happens after any special introductory offers expire. 

"A lot of credit card offers pony-up sweet deals to get you interested, such as no annual charge, or a super low-interest rate for the first year," Orman said. "But what happens after the first year? The card issuer is banking on you sticking around (which you will if you have an unpaid balance). Then after the first year, they often will start charging an annual fee, and the interest rate on your balance will skyrocket to 15%, 20%, or more. Check the fine print to see what happens after the initial honeymoon. Can you afford it?"

This advice is spot on because it's very common for cards to become much more expensive after special deals are done. But as long as you've spent responsibly and not run up a balance you can't pay back, this shouldn't necessarily preclude you from getting the card. You can close it after the year is up. And even if you did end up with debt you can't pay back right away, a balance transfer could be an option. 

Ultimately, it is a good idea to think about the answers to these questions -- but while Orman's suggestions about examining these issues are good, you should also take these other things into account when deciding what is right for you.