There are plenty of practical advantages that come with owning a credit card. Having access to one allows you to streamline your online and in-store transactions while enjoying security features of a global standard.
Many issuers also offer better rewards and higher credit limits to people who use their credit cards as a preferred payment method. It’s no surprise, then, that many consumers are eager to take part in quick and simple online credit card application processes, like that of the Landers Cashback Everywhere Credit Card by Maya, to be able to make good on the benefits.
To maximize the advantages each of your cards offer, however, you’ll need to know how to balance out your spending habits for all of them. This can be a challenge considering that each card comes with its own billing cycle, credit limit, interest rates, and details that you must be able to keep track of. Overextending yourself by wielding too many credit cards can quickly lead to financial stress. Before getting a new credit card, it’s important to assess whether the addition of another to your collection can actually benefit you or not.
For an honest evaluation of whether you could use another credit card, consider the following:
1) Card Usage: How Well Are You Managing Your Current Cards?
Start by evaluating how well you manage your current credit cards. Here’s one of the first questions you should be asking yourself when faced with the opportunity to get another credit card: Are you paying your balances in full every month, or do you carry a balance?
If you’re already struggling to keep up with payments or tracking expenses, adding another card could make things worse. If your spending is under control, though, an additional card might be a good investment.
2) Credit Score: How Will the Application for the New Card Impact Your Credit Score?
Your credit score plays a major role in your financial health, and applying for another credit card can affect it. A new application will trigger a hard inquiry, which might slightly lower your score. Additionally, having too many open accounts can impact your credit utilization ratio and overall credit profile. If you can maintain a good credit score even after a hard inquiry, that’s a good sign that you can still manage a new card.
3) Purpose: What Is the Purpose of the New Card?
Next, ask yourself why you need another credit card. Are you hoping to take advantage of specific rewards, such as cashback on groceries or points for travel? Or do you want a backup card for emergencies? Having a clear purpose will help you choose a card that aligns with your financial goals. Without a defined need, you might end up with a card that doesn’t serve a meaningful purpose in your finances. Rather, it will just be another deadline to worry about.
4) Fees and Costs: Are You Comfortable with Your Current Card’s Annual Fees and Associated Costs?
Not all credit cards are free. Some come with annual fees, and others might have hidden costs, such as foreign transaction fees or high interest rates. These charges can add up quickly if you’re not mindful.
Before applying for a new card, review its fee structure and make sure the benefits outweigh the costs. If you already have multiple cards with fees, consider whether you’re getting enough value from each one.
5) Interest Rates: Are You Satisfied with the Interest Rates of Your Current Cards?
Some cards offer enticing perks, but come with high annual percentage rates (APRs). This can be costly if you don’t pay your bill in full. When considering a new card, compare its interest rate to your existing cards and determine whether you’re prepared to manage it.
6) Financial Stability: Are You Financially Stable Enough to Be Responsible for Another Card?
Your current financial situation should guide your decision to acquire a new credit card or not. If your income is stable and you have a healthy emergency fund, a new card might be a manageable or beneficial addition to your collection of financial tools. On the other hand, if your financial situation is uncertain, adding another line of credit could create unnecessary risk for you.
7) Rewards: Do the Rewards of the New Card Complement Those of Your Existing Credit Cards?
Take a close look at the rewards offered by the new card and compare them with those you already have. For example, if you already earn cashback with one card, getting another card with similar rewards might not provide significant additional value. Instead, look for a card that complements your existing benefits, such as one focused on travel or specific categories where you spend frequently.
8) Financial Goals: How Does a New Card Fit With Your Long-Term Financial Goals?
Consider how a new credit card fits into your broader financial picture. Are you saving for a house, paying off existing debt, or building a retirement fund? If a new card doesn’t directly support these goals, it might be better to hold off. Every financial decision should bring you closer to achieving long-term stability.
A balanced credit card portfolio can provide you with the flexibility and control you need to manage your finances effectively. Carefully weigh these considerations to come to a sound decision about whether to apply for another card or if you already have enough on your plate. Knowing your limit, in turn, will enable you to simplify your life and maximize the tools that you already have to achieve your financial aspirations.
