How many credit cards are you in your wallet? If you're like millions of Americans, you may have just one. And while this can make sense, it's often smart to apply for a second credit card even if you've already been extended credit.
Applying for a second card comes with some risks, but there are also lots of benefits to multiple credit cards if you use them responsibly. The key is to be smart about which second card you pick, apply for it at the right time, and manage both your first and second cards wisely without falling for common credit card myths.
Tips for choosing your second credit card
It's worth applying for a second credit card only if you find the right one that offers features or benefits your current card is lacking. Before you apply for card number two, ask yourself these questions.
- Does the card offer a generous signup bonus for new customers? Signing up for a second card could be worth it for the introductory offer alone. New cardmember bonuses, open only to new customers, could be worth hundreds or thousands of bonus points, travel miles or cash back if you achieve certain spending requirements.
- Does the card provide a zero percent introductory APR on purchases or balance transfers? These offers are often open only to new cardmembers. A zero percent annual percentage rate on purchases means your new card enables you to pay for things you buy over time with no interest while a zero percent balance transfer rate lets you move debt from your existing card over and reduces the interest you'll pay. (Be aware, though, there's sometimes a balance transfer fee).
- Does the card provide better rewards for your spending? If your current card doesn't provide any rewards, it makes sense to sign up for a card that does. A new card could also offer better rewards where your current one falls short. If you've already got a card offering 2 percent back on restaurants and groceries and 1 percent back on all other purchases, signing up for a second one that provides 2 percent back on gas and travel could make sense if you're a jet-setter.
- Does the card charge fewer fees than your current one? If you're planning a trip abroad and your current card charges a foreign transaction fee, it might pay to sign up for a new one that doesn't.6 THINGS TO KNOW BEFORE GETTING A CREDIT CARD
- Does the card offer better cardholder perks? If your first card doesn't provide airline lounge access, travel insurance, auto rental insurance purchase protections or other common cardholder benefits, it's worth a look at cards that do.
- Is the card available to you when it wasn't before? When you get your first credit card, you may get stuck with a secured card open to borrowers with no credit history. As you use that card responsibly and improve your credit, this could open up the door to a second card that doesn't require a deposit.
If a new card offers perks you're looking for or helps you accomplish a financial goal, it's worth considering applying for it.
How long should you wait to get a second credit card?
If you want the benefits a second credit card can provide, it may be tempting to apply for one as soon as possible. But if you've only recently received your first card, it's worth waiting as applying for too much new credit too quickly can hurt your credit score.
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When you apply for new credit, an inquiry goes on your report and stays for two years. Too many inquiries too close together raises concerns you're not managing debt responsibly, which can ding your credit.
Waiting around three to six months before applying for your second card minimizes any potential damage. It can also increase the chances you'll be approved for your second card, as you'll have a longer payment history with your first one that creditors can review.
Is it a good idea to get a second credit card?
Getting a second credit card can be a smart move if the card offers a new signup bonus you want to take advantage of, perks or rewards your card doesn't, or the chance to score a zero percent interest rate on purchases or a transferred balance. It's also convenient if you lose your first one or if you have a card not all stores accept.
Your second card could even help build your credit, as you'll have a new account with a payment history on your report. More importantly, a new card provides you with additional available credit, which can lower your credit utilization ratio. This ratio measures the percentage of credit used versus credit available and it's a key component in your credit score.
But there are risks to getting a second card, too. Access to more credit means you could get deeper into debt if you don't pay your bills in full each month. And juggling multiple cards increases the chances of a missed payment, which is detrimental to your credit score. It may also take you longer to earn enough rewards to redeem on either card when you split your spending across two of them.
Still, if you can manage the risks and find the right second credit card to meet your needs, applying for it often makes a lot of sense.