When is the best time to apply for a credit card?

What’s the “sweet spot” for applying for a credit card? Your own personal financial needs and opportunity play key roles. (iStock)

Despite the rise of digital-based financial payments, credit cards continue to flood the national landscape.

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All told, there are 1.06 billion credit cards in the U.S. in 2020, with 70 percent of Americans holding at least one credit card.

With credit cards so pervasive over the fruited plains, you’d think that getting a credit – even your first one – would be easy.

The truth is, applying for and getting a credit card has more hurdles than one might expect. For potential cardholders, knowing where you stand from a personal financial point of view is the first action step needed to cash in on some plastic.

“The best time to apply for a credit card is heavily dependent on your current financial situation,” said Adam Sanders, director of Successful Release, an organization that helps disadvantaged people with their finances. He broke down four optimal credit card opportunities.

The best time to apply for a credit card

For individuals who’ve never had a credit card and want to start building credit. “If you've never had a credit card before and want to start building your credit history the best time is now,” Sanders said. “One of the most important factors in your credit history is how long you have a credit history. Basically, the longer the better.”

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For people who just paid off a lot of debt. When consumers reduce their amount of debt, those consumers will get credit cards with better and better terms. “If you've recently paid off a substantial amount of debt, now is a great time to get a credit card with the best terms available," Sanders said. "It can take a month or two for credit rating agencies to find out about your debt payment. But after that happens you're in 'great shape' to get a credit card.”

It’s been seven years from Chapter 13 bankruptcy or 10 years from Chapter 7 bankruptcy. “When you have a bankruptcy on your credit report it can be difficult or impossible to get a credit card with favorable terms,” Sanders said. “Once that record has been deleted from your credit report you're in a good spot to apply for a credit card. The rates available to you once the record is gone are going to be substantially better than anything you saw during the prior period.”

FED’S EMERGENCY RATE CUTS AFFECT YOUR CREDIT CARD — HERE’S HOWA person has a significant existing credit card balance and has found a card with all-around better terms. There are thousands of different credit cards out there, and they all have different terms.

“If you have a significant credit card balance and find a card with a better interest rate, a lower annual fee, and low or no balance transfer fees it's likely worth applying,” Sanders said. “If you're approved and transfer your balance you'll be able to start saving money instantly. This can be a simple way to find big savings quickly.”

The worst time to apply for a credit card

The worst time to apply for a credit card? When you’re going big, consumer finance-wise. “One of the worst times to apply for a credit card is when you’re about to take out a big loan, such as a mortgage or auto loan,” said Kevin Joey Chen, credit card specialist at Finder.com.

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When you apply for a credit card, your issuer initiates a hard pull on your credit report, Chen said.

“This will lower your credit score by a few points,” he said. “That might not seem like a big deal, but small changes in your score can lead to big differences in your loan interest rate. For a large purchase such as a house, this can be the difference between saving or losing thousands of dollars.”

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Key tips before you apply

Before you apply for a credit card, do some personal financial due diligence first. “First, know your credit score, and apply only for the cards that fit your credit profile,” Chen said. “This will save you from unnecessary denials and protect your score.”

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Additionally, take your time and do your research.

“There are countless credit cards with different benefits, annual fees and reward structures,” Chen added. “Find a card you’ll actually use and enjoy, rather than rushing to apply for one just because you feel you should.”