3 Factors to Consider Before Opening a New Credit Card in 2022

If you’re looking for a new credit card in 2022, the options are endless. Although you may be considering a few offers with significant sign-up bonuses, there are other factors you need to consider.

Instead of focusing on the value of offers and bonuses, the most important thing is to assess the impact of adding another credit card to your wallet on your spending, financial experts tell CNBC Make It . As generous as a sign-up offer may be, it’s not worth spending beyond your means.

Here are three factors to consider to help you make the smartest decision for yourself.

1. Make sure the card matches your existing spending habits

No matter how tempting a credit card sign-up bonus might be, if the card doesn’t make sense with how you’re already spending money, it’s not worth it. get, says Matt Schultz, credit card expert at LendingTree.

“The best card for anyone is one that fits their lifestyle and helps them get what they want without incurring other unnecessary expenses,” he says.

A person who usually has a balance probably shouldn’t look for a rewards card. A the balance transfer card is probably better suited. Likewise, someone who spends most of their disposable income on travel probably wants to look for a card that specifically focuses on travel-related benefits.

“Think about the primary use of a card,” says Shannon Mclay, Founder and CEO of The Financial Gym. “This will determine the type of card you are looking for.”

2. If there is a sign-up bonus, look at the minimum spend required

Just because a credit card offers a generous sign-up bonus doesn’t mean earning the bonus is in your best interest. While this may represent free money for some consumers, it may force others to spend beyond their means.

“You can sign up for a credit card because you want the 100,000 points [bonus], but you might have to spend $4,500 in three months to get it,” McLay says. “If you’re not spending that much right now, you’re going to end up with credit card debt that you can’t get rid of. “

She advises her clients to read the fine print of any offer they’re considering taking up and come up with a plan to ensure they can spend responsibly while still receiving the reward.

If you’re unsure, calculate the value of the bonus – a good rule of thumb is to treat each point as a penny – and assess whether it’s worth increasing your average monthly spend that you would need to do. Here’s a full breakdown of how to calculate whether a credit card sign-up bonus is worth it.

3. Be prepared to follow multiple cards

Having multiple credit cards can mean juggling multiple payment dates, annual fees, and reward categories. But the most important thing, McLay says, is keeping tabs on your spending.

“If you’re using multiple credit cards at the same time, it’s harder to track your spending because it happens in two or three different places,” McLay says.

She recommends using one credit card at a time for the majority of your spending, while keeping your other credit cards active with easy-to-track charges like monthly subscriptions. This makes it easier to make sure you don’t miss a payment and hurt your credit score.

“It only takes one late payment of 30 days or more to cause real damage to your credit,” says Schulz. “When you have multiple credit cards, it’s not hard to end up having trouble making sure you’re keeping track of different payments, due dates and things like that.”

He recommends signing up for autopay immediately if you get a new card, and says adding text and email alerts for due dates can also be helpful.

If you decide to get a new card, you should also make sure you follow best practices, including keeping credit utilization low and paying off your balance as much as possible each month.

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About Shirley L. Kreger

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