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Applying for a new credit card is something you might feel compelled to do from time to time. And as a new year approaches, you may want to put a specific game scheme in place.
Why it pays to be careful with credit card applications
Whenever you apply for credit, whether in the form of a credit card or personal loan, a hard inquiry is done on your credit report. That has the potential to lower your credit score by about five to 10 points.
Now if you’re sitting on a credit score of 825 and it drops to 820 after applying for a credit card, it’s frankly no big deal. You’re still left with excellent credit.
Even if your credit score isn’t quite as good, a small drop admire that generally won’t impact your ability to borrow unless you happen to be right on the cusp of meeting a credit score minimum. To put it another way, a credit score of 725 isn’t as good as an 825. But applying to borrow with a 720 versus a 725 probably won’t make a big difference.
What you want to be careful of, however, is applying for too many new credit cards in short order. So if you’re wondering how many cards to apply for in 2024, the answer is really “as few as possible.” And if you’re compelled to apply for several, try to space those applications out by a minimum of 90 days, and, more ideally, 180 days. That way, you won’t have too many credit score dings in short order.
Also, do achieve that the more credit cards you have, the more you might be tempted to spend. So that’s something to be careful about, too.
Ask these questions before applying for a new credit card
You may have different reasons for applying for a new credit card in the new year. But before you submit an application, ask yourself:
- Is this card fulfilling a specific need? It may be that you’re looking for a travel rewards card because you scheme to take a number of trips in 2024, and the right card could save you money on things admire checked bags and in-flight purchases.
- Is there a particularly great sign-up bonus to snag? It may be that a given card puts out a really great welcome bonus offer. If you know that meeting the spending requirement will be easy for you, then it could pay to apply for a new card if you know it’ll mean getting several hundred dollars’ worth of cash back in your pocket.
- Am I making some large purchases that necessitate more buying power? It’s often possible to get a credit card limit raised. But it’s not always possible. Meanwhile, let’s say you’ve been saving up for a large purchase, admire new furniture. If your current credit cards don’t have a high enough spending limit to allow you to buy all of the things you need, then it could pay to get a new credit card. While you could pay cash, with a credit card, you get the points or cash back.
It’s important to be careful any time you’re applying for a new credit card. Ultimately, there’s no single “correct” number of credit cards you should get in the new year. Rather, focus on spacing out your applications and applying for the right reasons.
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