When is the best time to apply for a credit card – Forbes Advisor

Editor’s Note: We earn a commission from affiliate links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors.

No time of year is necessarily a better time for credit card applications, but a number of personal financial situations and other factors affect when you should (or should not) apply for a new credit card.

Before you apply for a new card, it’s important that you carefully consider which card types are best for your financial situation. Credit cards have different qualification requirements and benefits that you should be aware of before deciding to apply.

Reasons to apply for a new credit card

Sometimes having a credit card in your pocket can be a huge advantage. In other cases, applying for a credit card as part of a financing plan or other money movement can be much more beneficial. What’s right for you depends on your intended use of the card and your financial and credit situation.

Carrying a high-interest-bearing balance

If you have balance on a high-yield credit card, other cards can help you buy time with a balance transfer. You can ease the strain of paying a high interest rate on an outstanding balance by applying for a card that offers either a lower regular APR or, perhaps most helpfully, a low or 0% introductory APR for a limited period of time.

Several factors should be considered before attempting a balance transfer. The first should involve examining your likelihood of being approved. Traditionally, credit card companies that issue cards with the best balance transfer offers look for applicants with credit scores in the “good” or better range. Therefore, to have the best chance of admission, an applicant should have a credit score of more than 700. If you can’t get your score off your head, don’t worry — there are a variety of ways to check your credit for free.

Performing a balance transfer also typically incurs a balance transfer fee, so you should carefully consider whether you are actually saving money by offering a reduced APR or an APR induction period. If you can pay off the balance in a few months, the fee for transferring the balance may exceed the interest charges. However, if you need a longer period of time to settle your debts, you can often save money with a balance transfer despite the fee.

A balance transfer calculator can help you figure out if transferring balance from one card to another is right for you. The best balance transfer credit cards have long introductory APR periods, but always remember that a regular APR applies when a balance transfer period ends.

Make a big purchase

A 0% APR credit card can help you pay for large purchases interest-free for longer than a single billing cycle. However, be prepared that you have to make the purchase within a certain window of time from opening the account. You can use a card like this to make the purchase and then use a 0% interest promotional period to pay it off, but beware, when the 0% introductory period ends, a regular APR on unpaid balances will apply.

Credit cards typically charge double-digit APRs, which can add up quickly when you have a balance. The interest-free period of a 0% APR introductory offer allows you to pay off the purchase over time without incurring large interest charges that would make the purchase more expensive. The best 0% APR credit cards on the market have long introductory periods, often offering well over a year with no interest.

Build or repair credit

Credit cards also offer relatively easy ways to build or repair credit. Compared to other types of larger loans, such as B. Auto loans or mortgage loans, credit cards are generally much less risky for lenders. Whether you’re new to the world of credit and need to start from scratch or have a bad credit situation, the right credit card can help.

Secured cards and cards designed specifically for students are good choices in these situations and can help build a healthy credit history — they show lenders your credibility as a borrower.

Building credit with a credit card can lead to better credit card opportunities later with more rewards and benefits, and can also help you prepare for other types of borrowing. When you’re ready to buy a car or house, or borrow money to start a business, the credit history created with a credit card can make or break a lender’s decision.

What is good credit?

It should come as no surprise that when you have good credit, it’s easier to get credit card approval with attractive rates and terms. A credit score represents to a lender the risk of the borrower defaulting on a loan. As such, it would be beneficial to wait until your credit score and credit reports are in good standing before applying for a new credit card — especially cards with long introductory APR periods or cards with great rewards programs.

According to FICO, the most commonly used credit scoring model, the credit score ranges are as follows:

  • Exceptional: 800 to 850
  • Very good: 740 to 799
  • Good: 670 to 739
  • Fair: 580 to 669
  • Bad: 300 to 579

If you are dealing with bad or fair credit, there are many steps that can help you improve your credit score. The first and most important is to pay your bills on time every month as this is the number one factor affecting your credit score.

You can also reduce your total credit usage – the amount of your total credit limit that you actually use. A third helpful tip that could improve your score is to regularly review your credit report and correct any errors you spot.

If these steps aren’t enough for your situation, try building your credit with a secured credit card.

Are pre-approval or pre-qualification offers worth it?

Obtaining pre-approval or pre-qualification for a credit card can help you assess the likelihood of being approved when you apply, but it is not a guarantee. Lenders can find your information on credit bureau lists of trusted consumers and send you offers after querying your credit report.

These pre-approval offers can sometimes be more lucrative than those available to the general public. So if you are interested, keep an eye on your inbox or mailbox and act quickly on the offers you are interested in.

Issuers like American Express, Bank of America, Capital One, Citibank and Discover allow you to check online to see if you’re prequalified.

What happens if I apply for multiple credit cards?

Whenever you apply for a credit card account, your credit report is harshly queried. Every tough request hurts your credit score a bit. In some cases, there may be an compounding effect when multiple requests are made in a short period of time.

While there isn’t necessarily a specific amount of time you should wait to apply for another card, it’s important to weigh the tradeoff between submitting multiple offers and maintaining good credit, so we recommend a best of all at least 90 days between the applications to await results.

Can I apply for credit cards that I have closed?

Yes, you can apply for previously closed credit cards. You have to submit a new application and are usually not given preferential treatment because you previously held the card.

Some issuers may prevent you from claiming a welcome bonus again based on your previous account holdings. Also, your previous account should have been sound at the time of closure, otherwise the issuer is unlikely to approve your new application.

Find the best credit cards for 2022

No single credit card is the best option for every family, every purchase, or every budget. We’ve selected the best credit cards to be most helpful to a wide variety of readers.

bottom line

While open season for credit card applications runs year-round, your financial situation or credit history may determine when you should apply for a credit card. If you need to transfer a balance or finance a large purchase, you may want to do it on a new card with new introductory periods of 0% APR. However, if you recently applied for credit cards, you should wait a while before applying again.

Card pre-approval or pre-qualification offers that offer above-average welcome bonuses can also provide good opportunities to apply for a new card. Just be aware of the credit implications of applying for new cards too often, and always carefully read the terms and conditions of any account you sign up for.

Comments are closed.