When is the best time to apply for a credit card

By Matt Mayerle
Modified on May 8, 2023
when is the best time to apply for credit card

When thinking about applying for a new credit card, it is a good idea to be mindful of how it might affect your credit score as well as your overall financial well-being. You shouldn’t jump at every tempting offer thrown your way. We are all familiar with those tantalizing mail offers and email subject lines that boast “limited time offer,” “0% intro APR,” and “you’ve been pre-approved!” 

It’s easy to get sucked in when credit card companies use such persuasive advertising techniques. But it is always advisable to analyze why you are considering applying for a new credit card before doing so. 

If you apply for every new offer you receive, you will end up with a credit report filled with hard inquiries. And too many credit cards could start you down the road to a debt spiral that will leave you with account balances you can’t manage. 

How Credit Card Applications Affect your Credit Score

You might wonder what the problem is with applying for credit card offers as you come across them just to see if you will be approved. The issue that can pop up when you apply for a credit card is that every application causes a hard credit inquiry to appear on your credit report regardless of whether you are approved or denied. 

Having multiple hard inquiries on your credit report, especially too close together, can negatively impact your credit rating. Because of this, you will want to make sure that every new credit card application is worth the hard inquiry and not simply trying to take advantage of every sign-up bonus that comes your way.

The Right Time to Apply for a Credit Card

Now that we’ve established why it is not a good idea to constantly be applying for new credit cards left and right, when is the right time to apply for a credit card? 

Even though many credit card issuers may push promotions or welcome bonuses at particular times in the year, such as the holiday season, your decision to apply should be driven by your financial situation rather than other factors. 

When determining whether you ought to get a new credit card, you should consider your long-term financial goals in addition to your immediate needs. Being carefully strategic with opening new credit accounts could be precisely what keeps you in good standing with the credit bureaus.

Here are some of the best times and reasons to apply for a new credit card:

You’re Planning a Big Purchase

An excellent time to apply for a credit card is right before you make a large purchase that you’ve been planning. Using a brand new credit card for a big purchase allows you to take advantage of a promotional 0% APR to get no interest on your spending. You can also earn rewards points from a credit card sign-up bonus on the balance you wrack up from your large purchase.

Some credit issuers offer huge cashback bonuses or double rewards points if you spend a certain amount of money within a specified time frame. Meeting these spending requirements allows you to get the most benefits from your welcome bonus by timing your account opening to a big-ticket purchase you were already planning on making. 

The key to making this strategy as friendly to your finances as possible is only using it for a purchase you would be making anyway and have already set aside cash for. Opening a new account and proceeding to make a lot of unnecessary large purchases with money you don’t have just to meet the spending requirements will only damage your finances in the long run. 

The best time to take advantage of a welcome bonus that offers more rewards is when you would already meet the spending requirements, whether you have a new credit card or not. After earning all the rewards available to you, you can proceed to pay down the balance to avoid interest and build your credit history.

You Want to Build your Credit Profile

Applying for a credit card could be a good move if you want to build credit. Opening new lines of credit could help by diversifying your credit mix, which could be lacking if you only have financial products like a mortgage or auto loan on your credit. A new credit card could also give you an opportunity to improve your overall credit history through on-time payments. 

Your payment history makes up 35 percent of your credit score, while your credit mix accounts for 10 percent. If you are in a good position with your finances, a new credit card could be the perfect way to positively impact your credit report and improve your FICO score. 

Additionally, a secured credit card is the perfect financial product to build credit for individuals with little to no credit history to speak of. Starting out with a secured credit card that uses a cash deposit can pave the way for you to obtain credit levels that qualify you for unsecured cards with better rewards and interest rates.

You Have a Balance on a High-Interest Credit Card

If you have a balance on a high-interest credit card, it might be wise to transfer the balance of that card to a new card with a lower interest rate. The point of balance transfers like these is to significantly reduce the interest charges you have to pay to save you money as you pay down your balance.

High-interest debt can make it incredibly difficult to make any progress on decreasing your overall card balance. When you are approaching your credit limit and the monthly payments you can afford barely make a difference because of the interest charges, it’s time to consider a balance transfer to a new card. 

This would be a perfect opportunity to apply for a credit card with an introductory period of 0% APR on balance transfers. You may be able to find card issuers that charge minimal to no balance transfer fees. The goal being to pay off the remaining balance before the introductory APR ends.

The Wrong Time To Apply for a New Credit Card

At the other end of the spectrum, there are plenty of times when you should not be applying for a new credit card. Applying for a credit card at the wrong time can lead to a lower credit score and harm your chances of qualifying for other financial products if you aren’t careful. 

Before deciding to apply for a credit card, you will want to take several factors into consideration instead of being drawn in by the offer of a big bonus or a pre-approval. 

Here are a few examples of when you shouldn’t apply for a new card:

You’ve Had Recent Hard Inquiries

As we mentioned earlier, each application for new accounts leads to a new hard inquiry on your credit reports. Too many of these within a short period of time will damage your credit score, making you appear unreliable and high-risk to any financial institution you try to work with soon after. 

If you know you’ve had multiple inquiries in the last few months, put a pause on making a new credit card application for the time being. It’s best to allow a little time to pass until those hard inquiries are less prevalent to your credit score before getting a new card.

You’re About to Apply for a Mortgage or Other Loan

Risking a hard pull on your credit score right before you are about to apply for an important loan like a mortgage is a bad idea. The financial institution you are applying for a loan with will likely look over your report closely, and any recent inquiries might give them pause. 

If possible, it’s best to avoid having a recent rejection for new credit when applying for a financial product that is harder to qualify for, like a mortgage, auto loan, or personal loan. Lenders frequently require an excellent credit score to approve you for long-term installment loans. 

Your Finances Aren’t in the Best Shape

If you are already swimming in debt, this is not a good time to add to it with a new credit card. Do you have enough cash flow to keep up with your current debt, or are you simply making the minimum payment on every credit card bill? 

If you are reaching your credit limits regularly on the current cards you have and juggling other debts like online advance loans paid in cash, you will want to focus on paying down your debt before even considering applying for a new credit card. Adding a new card to your roster will not help you attain good credit if you can’t even manage to pay down the balances you already have

Think Before You Apply

When it comes down to it, the best time to apply for a credit card is when you are financially stable and have good reason to do so. Simply pausing and evaluating exactly why you are tempted to apply for a fancy new rewards credit card will prevent a majority of mishaps that could harm your credit score.By being careful and strategic in your credit acquisition, you can save money and maintain excellent credit while avoiding falling into unmanageable debt. Your personal finance situation is the most vital factor in determining the right time and the right credit card for you.

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