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Before You Sign Up For Another Credit Card, Ask Yourself These Four Questions

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Having credit is very necessary these days. It’s one of the ways people review you for potential loans and employment. However, the key to a healthy and robust credit report is not how many lines of credit you have, but how well your credit is managed.

One of the easiest ways to cushion, repair and bolster your credit is through credit cards.

Mortgages and car loans are popular sources of credit, but having multiples of these can be unreasonable. However, carrying more than one  credit card does not come with the same degree of obligation.

Why? Because unlike mortgages or car loans, which are considered installment credit or non-revolving credit, credit cards are sources of revolving credit.

In other words, the former have set amounts repaid over time  With revolving debt,  the amount owed changes each month based on how much you use the credit cards. For a $500 credit limit, that amount can be used as many times as it is repaid; likewise, the holder can have the credit line open, use it and never reach the $500 limit.

Quizzle’s Credit 101

That being said, opening additional credit cards is not always the wisest financial decision.

“Certainly, there’s such a thing as too many credit cards,” said Forbes’ Barbara Marquand. “There is no precise number, but if your wallet is thicker than a paperback bestseller, and you’re having trouble keeping track of umpteen different due dates and balances, then you know you’ve passed the threshold.”

Before signing up for another card, ask yourself the following questions.

Pre-Credit Card Application Questions

What does my credit report currently look like?

If you don’t know what your credit report looks like, consider using free resources like those found on Quizzle. It is your responsibility to stay on top of your credit report.

Why am I looking at opening more credit?

Keep in mind credit is a vehicle of financing what you can already afford. It should not be used as a life preserver against a hurricane of debt. If you are in financial duress, seek professional assistance.

What makes this credit card appealing?

What are the interest rates and rewards associated with this credit card?

Are the rewards contingent upon spending more than you typically would? Do they roll over after a certain period or disappear if you do not use them after a few months? Do not fall into the trap of signing up for a card that offers appealing rewards but requires you to spend beyond your normal habits. It is not worth the bonuses to spend beyond your means.

Find the best credit card for you

What are the fees associated with the card? Are they worth the benefits you would receive?

Have you read the fine print?

Look at the fine print and understand the terms and conditions you will be agreeing to with your signature.

Financial contracts, like any other contract, are binding agreements, whether you actually read and acknowledged the fine print or glossed over the smaller details.

The Bottom Line

Having multiple credit cards can be beneficial to your credit report if they are all used responsibly.

The key to having a healthy credit report is to make your credit work for you, not to use it as a financial crutch.

“Your credit cards can be convenient tools to help you manage your money as long as you manage your credit wisely,” said Quizzle’s Katie Bushor. “But, one false step and the benefits of credit you may be enjoying now can quickly slip away.” can we re-word  this quote and have the quote come from me?

Opening another credit card can be a prudent way to help mend or boost your credit report, but you need to ask yourself the questions above before making a decision. Mishandled credit cannot help build security. Don’t be caught unaware – take responsibility over your financial portrait through financial literacy and accountability.


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