Why the Holiday Season May Be the Perfect Time to Open a New Credit Card

The holiday season is approaching fast. If you're like most people and are planning to spend money on travel, entertainment, and gifts, you may want to open a new credit card first.

Here's why the holidays could be an ideal time to sign up for a new rewards card.

Your holiday spending could pay off big time for you

There's a very simple reason why signing up for a new card during the festive season could make a lot of sense. See, many credit cards offer generous bonuses for new cardmembers -- but there are usually minimum spending requirements you have to fulfill to get the bonus. The cards offering the most generous bonus points, miles, cash back, or other rewards generally require you to spend as much as $1,000 in the first 90 days after becoming a cardmember.

Now, charging that much on your cards in a three-month period may not be something you do on an ordinary basis. But when you are doing your holiday shopping, chances are good that you'll hit this target easily. In fact, consumers plan to spend an average of $1,652 this holiday season according to a new study. That's 14% more than last year, and it's the first year that expected spending will surpass pre-pandemic spending levels.

If you spend anywhere close to this average amount, your holiday spending alone could be enough to put you over the top so you can get the new cardmember bonus.

Of course, ideally, your new card will also have a great rewards program so not only will you get that extra bonus upfront, but you can also hopefully earn plenty of additional rewards for all those dollars spent.

Should you open a new credit card this holiday season?

If you have the opportunity to earn a huge new cardmember bonus for your holiday spending -- and you can also get a card that will provide generous points, cash back, or miles for the types of spending you're doing -- then it may seem like a no-brainer to sign up.

And, indeed, that is the case for most people. There are, however, a few caveats. For example:

• You don't want to open a new credit card if you're planning on taking out large loans soon. Applying for and opening a new card can temporarily reduce your credit score. If you'll soon be getting a mortgage or car loan, you don't want to take that hit to your credit score before doing so.
• You want to make sure you trust yourself not to overspend. If you get a new credit card, charge a fortune on it, and end up not being able to afford to pay it back, you could get stuck with interest charges that negate the value of your rewards and your new cardmember bonus.

Outside of these situations, though, as long as you'll be able to pay off the holiday expenses, there's little reason not to take advantage of a generous bonus offer if your festive spending will enable you to meet the requirements to earn your bonus bucks.