When is The Right Time to Apply for a New Credit Card?

It won’t be an exaggeration to say that credit cards have taken over the financial world by a bolt! Vouched for their versatile and dynamic benefits and offers, these cards help you save big on otherwise hefty transactions. With so many credit card options available, that too with different features and benefits, undoubtedly, we want it all.

With that said, applying for too many credit cards at once can have serious consequences on our credit health. Moreover, if you keep on applying for a new credit card every now and then, you will appear to be a person who cannot handle finances well.

Timing is indeed a major player when it comes to applying for a new credit card. This write-up offers insights on how to figure out the right time to apply for a credit card. Here, you will also learn things and situations to consider before applying for a credit card in uncertain times.

Reasons You Should Apply for a New Credit Card

Undoubtedly, it’s always a good idea to have a credit card handy in dire situations. Furthermore, applying for a credit card as a phase of your long-term financial plan brings a plethora of benefits. Here are some benefits listed for you -

• Option to Go for a Balance Transfer - If you carry a balance on a credit card with high interest, additional cards can provide a means to extend your repayment timeline through a balance transfer. The option of obtaining a different card comes with the benefit of reducing the pressure of managing a substantial balance under the weight of a steep interest rate. You can apply for a card that presents either a decreased regular APR or, potentially most advantageous, an introductory APR set at a minimal rate or even 0% (albeit for a restricted duration).
• Ease of Making Big Purchases - You have to buy stuff within a certain time after you open the card. A 0% APR credit card lets you buy big things without paying extra money for a while! You can use this card to buy stuff and then use a special time with 0% interest to pay for it. But watch out! After this special time, you have to pay a regular interest if you still owe money. Most credit cards come with a considerably high interest rate. With a 0% introductory APR, however, you can easily take your time to pay off for what you bought without making it cost a lot more due to interest.
• Helps in Building credit Score - Credit cards offer relatively simple ways to establish or fix your credit score. Unlike bigger loans like car loans or home mortgages, credit cards are less risky for lenders. They are a good option whether you're new to credit and need to start building it, or if your credit is not great.

Secured credit cards and cards meant for students are great picks in these situations. They can assist you in creating a strong credit history, proving your trustworthiness to lenders.

Using a credit card to build a credit score opens the door to better credit options in the future. 

What Happens When You Apply for Multiple Credit Cards?

Just because credit cards help in building credit scores does not imply that you should apply for multiple credit cards at once! In fact, every time you apply for a credit card, the bank or the lending institution conducts a hard pull or hard inquiry against you. Applying for multiple credit cards at once can lead to multiple hard inquiries, which appear in your credit report and end up hurting your credit score.

Even though there is no significant amount of time for which you should wait, experts usually say that you should wait at least 6 months before applying for a new credit card. 

How to Come to Consensus about the Right Time to Apply for a Credit Card?

Having understood the implications of applying for a credit card, let’s understand how long and in what scenarios you should wait before applying for a credit card. We will also shed light on the big question - When is the best time to apply for a new card?

When Should You Wait to Apply for a New Credit Card?

Here are the scenarios in which you should hold yourself from applying for a new credit card -

• If You Have Recently Applied for a Credit Card - When you ask for credit, the lender usually asks for your credit report, which is called a hard inquiry. If there are too many of these in a short period, lenders might worry that you are not good at handling credit. Some card companies also have their own rules about how much time should pass before you apply for another card from them.
• When You Plan on Applying for a Mortgage or a Loan - Avoid applying for a credit card if you plan to get other types of credit soon such as a home loan. Even though one credit check has a small impact on your credit, a small drop in points might stop you from getting the best interest rate if you are close to the limit. Getting a new credit account will also make your average account age shorter. Lenders, on the other hand, prefer longer credit histories. Specialists suggest not getting new credit for a year before applying for a home loan.
• If You Cannot Afford to Pay Your Existing Credit Card Bills - It is always a good idea to hold off on getting a new credit card if you cannot pay off your existing ones or if you think having a higher credit limit might make you spend too much. Wait until you are sure that your income and how you spend money can handle having more credit from a new card. 

When is the Right Time to Apply for a New Credit Card?

Consider getting a new credit card when you are in these situations -

• When Your Credit Score Gets Better - If your credit score has improved since you got your current credit card, you might qualify for a new one with better perks. This can especially be the case if you had a student credit card in college or a secured card to build credit.
• If You Are Looking for a Credit Card with Better Rewards - If you want a card that gives you more cash back or travel points based on your current lifestyle, it is worth a consideration. These cards usually need good credit habits, which isn't a problem if you've been responsible with credit.
• When You Want Special Offers - Some cards offer 0% interest for a year or more, which is great for interest-free purchases. Other cards give cash rewards if you spend a certain amount in the first few months. If you are planning a wedding or home project, this could give you discounts.
• If You are a Pro at Managing Your Credit - If you have expertly navigated the domain of credit so far, you can certainly consider getting a new one as per your requirements.

Things to Consider When You Apply for New Credit Card in Unsure Times

Here are some things to keep in mind when you apply for a new credit card -

• Consider if now is the right time for a new credit card - Credit cards can certainly help people and businesses deal with money problems. However, don’t forget that you have to pay back everything you borrow from the bank each month. If you cannot, you will owe extra money as interest. So before you apply, think about whether you can handle paying the card's amount every month.
• Decide if you urgently need a credit card - Only get a new credit card if you really need money right away. Choosing a 0% interest card can save you money. If your credit history and score are good, these cards can be of help when you are low on money. These cards are budget-friendly and do their job well.
• Manage your monthly spending - Try to cut down on unexpected expenses and avoid piling up debt along with interest. Along the same lines, you should spend wisely and save money for important things like food, rent, and emergencies.
• Deal with your current credit card bills - Before getting a new card, make sure that you have paid off all the debt listed on your credit report. If not, you might end up with higher interest and more debt. It is better to reduce your debt by opening a new credit line instead of adding to it.
• Find ways to replace lost income - While a new credit card seems like a good idea, you should also try to earn more money online. You can, for instance, do freelance work, take online courses, and improve your skills to become more employable and replace the income that you lost.

To know more about when is the best time to apply for a new credit card, let’s take a look at some related FAQs. 

Frequently Asked Questions