It pays to hold off on submitting a credit card application.
- It’s important to time your credit card applications strategically.
- Getting a new card now might tempt you to spend more in the near term.
- Consider your existing debt, spending needs, and plans to apply for a big loan (such as a mortgage) in 2023.
At this point, a lot of people are starting the countdown to 2023. And you may be in the process of making plans for the new year and coming up with some resolutions to work on.
But in the coming weeks, you might also be tempted to open a new credit card. You might see an attractive offer come your way, like a generous rewards program. There might also be an opportunity to snag a hefty sign-up bonus. But while opening a new credit card now might seem like a good idea, here are three reasons to hold off on doing so until the new year.
1. You already have debt
If you already owe money on your credit cards, then you probably don’t want to add a new one into your personal mix anytime soon. Another credit card could lead to a situation where your debt load increases. That could trap you in a cycle of losing lots of money to interest and make it harder to work your way out of that hole.
2. You might open the door to more holiday spending
The holidays are a time of the year when it can be difficult to exercise self control. First of all, there’s a lot of pressure to spend money on things you don’t normally find yourself buying. But also, now’s the time of year when retailers tend to run sales left and right.
If you get a new credit card in December, you’ll have a higher total spending limit to work with. But you might then start making charges against that limit you can’t keep up with. That could drive you deep into debt, which is not such a great way to close out the year (or start off a new one).
3. You’re planning to apply for a mortgage in early 2023
Maybe you’ve been saving up for months to purchase a home, and so you’re thinking you’ll end up applying for a mortgage loan in early 2023. In that case, it could definitely pay to delay a credit card application — even if you have no credit card debt at present and aren’t really at risk of ending up with some.
Any time you apply for a new credit card, it results in a hard inquiry on your credit report, which can bring your credit score down a few points. Now if you have really excellent credit, that may not be a problem. But if your score isn’t all that great, it pays to avoid hard inquiries and small dings until your mortgage is in place.
Waiting on that credit card application could make it so you have less trouble getting approved for a mortgage. It could also help you snag a more affordable mortgage rate.
Be careful with credit card applications
Applying for a new credit card at the wrong time could have consequences. If these situations apply to you, it could pay to hold off on getting a new credit card for the rest of 2022.
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