Should I get a credit card? What to consider first
February 8, 2024 9 min read
As with so many decisions in life, deciding when to apply for a credit card often comes down to timing. But how do you know when it’s a good time to apply for a credit card or when you should wait?
Here are some tips that can help you figure out if it’s the right time.
There are a number of questions worth considering when trying to decide whether it’s the right time to get a credit card.
Pre-approval can help you figure out whether you might be approved for a card before you even apply.
Whether or not it’s the right time to get a credit card is ultimately up to you.
10 questions to ask before applying for a new credit card
It can be hard to know when to apply for a credit card. And while there’s no one-size-fits-all answer, there are some ways to figure out when the timing might be right.
Here are some questions to consider before applying for a new credit card:
1. Are you ready to do some research?
There are many different kinds of credit cards out there. And each one comes with different features, benefits and requirements. Doing some research first could help you get a better idea of what kind of card you might qualify for. And you can decide what card best suits your specific needs and spending habits.
Websites that compare credit cards can be a good place to start. But actually visiting the credit card company’s site will likely give you more detailed information about each card’s fees, security features and benefits—including rewards you may be able to earn.
You might even be able to find out what credit levels are typically required for each card. And that can help you narrow down your options. Once you figure out which card you’re most interested in, make sure to read all the terms and conditions on the issuer’s site before you officially apply.
And if you need help sorting through all the information, talking to a qualified financial expert can help.
2. Are you ready to establish a credit history?
Having good credit can help you in so many ways. But if you’re establishing a credit history for the first time, it can be tricky to know where to start. Getting a credit card can be a good first step, but using your credit responsibly is always key.
According to the Consumer Financial Protection Bureau (CFPB), using a credit card responsibly—by doing things like paying your monthly bills on time and staying below your credit limit—can be a part of establishing a good credit history.
Your credit history is one of the factors that go into calculating your credit score. Your credit score gives lenders a general idea of how financially responsible you are. And it can be a factor lenders use to decide whether to approve your application for credit and what interest rate to offer you.
3. Have you been pre-approved?
Pre-approval isn’t a guarantee that you’ll be approved, though. You can think of a pre-approval offer as an invitation to consider applying for a credit card. Basically, the issuer determined you meet some initial eligibility criteria. But you still have to apply. It can also give you a better idea of what kind of cards you might qualify for. And it can help you compare your options and credit card terms before applying.
If you’re actively looking for a new credit card, you can even use online tools to get pre-approved. You can quickly see whether you’re pre-approved for a card using Capital One’s pre-approval tool—with no impact to your credit score.
4. Are you planning a big purchase?
Some people consider applying for a credit card before making a big purchase. That might include things like appliances, furniture or a family vacation.
Using a credit card can allow you to pay for big-ticket items over time instead of having to pay the entire cost upfront. You could consider a credit card with a low introductory APR offer. That way, you may be able to avoid paying interest on your purchase if you make your payments on time and pay off the balance before the introductory period ends. And depending on the card, you might be able to earn rewards, too.
Paying for a large purchase with a credit card isn’t your only option, though. And it may not be right for everyone. For example, there might be other financing options available to you through a lender or the seller. It’s all about figuring out what makes sense for you.
5. Do you need to build or rebuild credit?
Using a credit card responsibly is one way to build or rebuild your credit. Whether you’re new to credit or trying to get your score to a better place, a credit card is one tool you can use.
Wherever you are on your credit journey, there’s likely a card that fits your needs. There are cards for less-than-perfect credit. And a secured card might be an option if you’re establishing, building or rebuilding your credit.
Keep in mind that the most important thing in building or rebuilding credit with a credit card is using it responsibly. Paying on time, staying below your credit limit and more can help you build credit and improve your credit score.
6. Do you already have a good credit score?
If you’ve already worked to build a good credit score, you could consider upgrading your credit card or applying for a new card.
Depending on your issuer, upgrading to a card that offers more perks or rewards could be a great option. You may be able to keep your existing account but replace the card associated with it. That way, you can maintain your account’s credit history. And the length of your credit history can be a factor that affects your credit score.
Everyone’s situation is unique, but applying for a new credit card might also make sense for a number of reasons. It can be helpful to have an extra line of credit in case of unexpected expenses. And new accounts may also be eligible for additional rewards, like bonus miles or cash back, if you spend a certain amount after being approved for the card.
7. Do you have high-interest debt?
Managing debt can be stressful, especially if it comes with a high interest rate. If you’re struggling, consolidating credit card debt might be one way to simplify and lower your payments.
If you’re making multiple credit card payments each month, you might be able to combine them into one monthly payment by using a loan or a balance transfer. Typically, you’ll want to transfer your balance to a loan or credit card with a lower interest rate. Some credit cards even offer 0% introductory rates to start, but those rates only last for a limited time.
But as the CFPB notes, credit card debt consolidation won’t eliminate your debt. And depending on the terms of the balance transfer, there’s a chance you could end up paying more in the end because of fees, interest and other factors.
8. Are you prepared to budget with your new credit card?
As a credit card holder, it’s important to use a credit card responsibly. That means doing things like avoiding late credit card payments, paying more than the minimum payment and staying well below the credit limit—all of which can help you better manage your finances and may have a positive effect on your credit scores.
It’s also important to budget. Thankfully, your credit card comes with a useful budgeting tool: the monthly credit card statement. Reviewing it can help you keep tabs on your spending habits and figure out where your money is going each month. You can then use that information to create a realistic budget. And you can typically access your statement and manage your account online—which can make budgeting even easier.
9. Are you applying for a mortgage or a loan?
According to the CFPB, if you’re in the middle of applying for a mortgage or car loan, you might want to think about waiting to apply for a credit card. But everyone’s situation is different. A qualified financial adviser can help you figure out if you should wait to apply for a credit card.
When you apply for any kind of loan, the lender will likely look at your credit report and score to determine whether to approve your application and what interest rate to offer you.
And each application—whether it’s for a mortgage, a credit card or other loan—can cause a hard inquiry, which can temporarily lower your credit score. So it’s best to think through your entire financial situation before applying for a credit card while you’re also applying for another line of credit.
10. Have you recently had hard credit inquiries?
Similar to applying for a mortgage or car loan, if you’ve recently had multiple hard inquiries—by already applying for multiple credit cards, for example—it might be better to wait to apply for another credit card, according to the CFPB.
Credit card applications could trigger additional hard inquiries. And multiple hard inquiries in a short period of time could negatively impact your credit.
And remember, checking to see if you’re pre-approved for a credit card can give you a better idea about what cards you might qualify for before you apply without hurting your credit score.
Getting a credit card in a nutshell
Whether it’s the right time to get a credit card is ultimately up to you. Everyone’s financial situation is different. And what’s right for you might not be right for someone else. The best thing is to do your research, think about the big picture of your financial health and talk to an expert about what decision is right for you.
If you’re ready to get started with a new credit card, get pre-approved for a Capital One credit card today—with no harm to your credit.