Applying for a credit card can be exciting and a bit nerve-wracking. Will you be approved? How high will your new credit limit be? And can you reach the spending requirement for that sweet welcome bonus?
Unfortunately, it’s not a good idea to just apply for any shiny new credit card you learn about. Since your finances are at stake, it’s worth thinking carefully about the cards you want and making sure that the hard credit pull (which lowers your credit score by a few points) is worth it.
Here are four red flags that you’re applying for a card that’s not right for you.
1. Your credit score is less than the requirement
Some credit cards have more stringent credit score requirements than others. Depending on your credit score, you might not qualify for the best credit cards available — a lot of them target applicants with good credit, which is a credit score of at least 670.
This isn’t to say that you can’t be approved for a card with a lower score — credit card issuers consider your whole financial picture, including income and debt situation.
But if you have a credit score of 600 and are targeting a higher-end card, you might not want to get your hopes up. Instead, target a card for fair or average credit. And work on your credit score so you can eventually apply for that other card and have more confidence you’ll be approved.
2. The annual fee is too high for you
You know what high-end credit cards often come with? A big annual fee. An annual fee on a credit card shouldn’t automatically be a dealbreaker — two of my favorite cards have annual fees and I easily get my money’s worth out of the cards. But paying an annual fee for a card I don’t get as much use from would give me pause.
Before you apply for a card with an annual fee, make sure you can afford to cover that fee. Also, do the math to see how you’ll offset the fee with the card’s benefits.
3. The card doesn’t match your spending
Different cards have different bonus rates, and are therefore suitable for different types of spending. If you spend a lot of money on gas and groceries, it’s worth targeting a card that pays a high rate on both. But if the card you’re applying for doesn’t match your spending, it’s unlikely you’ll get enough value from it to make it worthwhile. This becomes even more crucial if the card has an annual fee.
Luckily, there are tons of options for all kinds of spending. If you like to dine out, there are cards for you. Same for travel, whether you want the flexibility of earning extra rewards on all kinds of expenses (like hotel stays, transit, and so on), or you want to be firmly in a certain airline or hotel chain’s ecosystem. You just have to explore what’s out there to find the perfect card for you.
4. The welcome bonus is the main draw
Finally, it’s a red flag if the main selling point for the card you’re applying for is the welcome bonus. Welcome bonuses are great — don’t get me wrong. A nice one (like earning $200 in cash back in exchange for spending $500 on the card in the first few months of opening your account) can sweeten the deal for sure.
But only focusing on the welcome bonus is a problem. You generally don’t have long to meet the minimum spending requirement, and ideally, you’re making a longer-term commitment to a new credit card than just three or six months. A new credit card has the potential to improve your credit score over the long term as you use the card and pay off the charges.
If you’re only interested in getting that welcome bonus and then stop using (or cancel) the card, you could burn your bridges with that credit card’s issuer, making it difficult to open new cards in the future. Other card issuers may check out your credit report and notice a history of new cards opened and closed in short order, and they tend to frown on that behavior.
So there you have it. Before submitting a new credit card application, make sure you’re interested in the card’s features as a whole, can afford the annual fee, and have an adequate credit score to qualify.
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