Is it time to get a new credit card?

Credit cards are great for earning rewards and points, but you want to make sure you have the right card for your spending style. There are many considerations when choosing a card, and depending on your life stage, you may need to choose a new one. This article will look at several different factors to consider when deciding if you should get a new credit card.

1. You found a credit card with special sign-up bonuses

One of the best times to look for a new card is when special sign-up bonuses are offered. These introductory bonuses can be worth hundreds of dollars. Often they come in the form of points or travel miles that you can redeem. Usually, these bonuses require the new cardholder to meet a spending goal within the first 30-90 days of opening the card. The goal is to get you to put money on the card so you can build up a balance. During these introductory periods, interest rates are also lower than normal.

2. You don’t earn rewards

Many older credit cards don’t offer rewards, so if you’re using a card without a reward system, it’s probably time for a switch. You also might not earn many rewards. If so, you should consider replacing your card with a new one with better rewards. Evaluate spending and determine if you want cashback, dining, or mileage rewards.

3. Annual fees reduce your card benefits

If your card has a high annual fee or if the annual fee eats up a large chunk of your rewards, it might be time to upgrade to a new credit card. Some cards, like the American Express Gold Card, offer great rewards but also come with steep annual fees. Carefully consider the benefits of a card and whether or not the annual fee is worth it.

4. Your current cards have a high APR

One problem with credit cards is that they can have a high annual percentage rate (APR). Currently, the average credit card rate is at its highest since 1996. APR is the amount of interest you are charged each month. When you carry a balance, this is the amount that is added to your card balance as interest. If you have a high APR, you will pay more interest each month. One way to avoid paying huge interest is to choose a low interest credit card.

If you’re struggling with a high balance on a high APR card, you can also use a credit card balance transfer to help pay it off. This way you can move your balance from one card to another (hopefully with a lower rate).

5. Your spending habits have changed

A telltale sign that you need to switch credit cards is if your spending habits have changed. As we age, change jobs, or go through major life changes, our spending habits naturally change.

For example, maybe you’ve used a travel card a lot before, but now you’ve settled in and used more cash back. If you’ve started a business or your business has grown, you might also need a new card. Remember that your business should be in good standing and with a good reputation and financial standing before applying for a new business card. Either way, your credit card should match your spending habits, and you should look for a card that’s right for you.

6. Your rewards are not used

Most credit cards offer rewards, but if you’re not using those rewards, you might want to switch cards. For example, a business credit card may come with unlimited 2x miles with 75,000 bonus miles, but you have to spend a certain amount to receive those bonus miles. If you do not frequently purchase airline tickets or plan to make purchases on the cards, these types of rewards will remain unused and ultimately you will not be able to enjoy these benefits.

Time to avoid getting a new card

  • Without doing research first

Don’t just ask for a new card the second you get the chance. It is important to do your research first. It is important to research all available options because not all cards are good for your spending habits. Also, applying for multiple cards at once can hurt your credit score.

  • After you lost your job or your income dropped

Avoid applying for a new card if you have recently lost your job or if your business income has dropped significantly in the past two months.

When you lose your job, you might need quick cash to pay your bills, but applying for a credit card is still not a good idea. For one, paying your monthly credit card bills can get tricky. Second, when applying for a new credit card, you will need to provide your income level. If you have no income, you will probably be refused, but you will still be affected by your credit score for the thorough investigation of your credit file. In this case, it is better to take the time to find a new job before request a new card.

Likewise, if your business income has declined, your business may struggle to pay off credit card debt. Ensure that you always send timely invoices for each client or client to ensure that the status of all payments are tracked and funds are received. Once your business income has recovered, you may consider applying for a new card.

  • When you apply for a new loan

One of the biggest mistakes you can make when applying for a new credit card is applying for one at the same time as applying for a large loan. When you apply for new credit, your credit score drops slightly. Your score can also be impacted by the number of new lines of credit you open at the same time. This means that if you intend to apply for a mortgage or a loan for a new car or a real estate project, you could receive an offer with a much higher interest rate than you otherwise would.

Conversely, you should also avoid applying for a credit card after applying for a large loan. It can also signal to creditors that you are going over your credit.

By Kiara Taylor

The Epoch Times Copyright © 2022 The views and opinions expressed are those of the authors. They are intended for general informational purposes only and should not be construed or construed as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or other personal finance advice. Epoch Times assumes no responsibility for the accuracy or timeliness of the information provided.

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