How many credit cards do you have? Even if you have a few, you might not be getting all the benefits you could be reaping if you added another to your wallet. If you’re on the fence, here are good reasons to consider getting a new credit card.
Did you take out a Chase Sapphire Preferred or an American Express Starwood Preferred Guest card with dreams of free flights and luxury hotel stays only to realize that you don’t travel that much? If that’s the case, those cards are taking up space in your wallet with little benefit to you.
Not all of us travel, but all of us buy groceries and many of us buy gas. If you don’t travel much, let those travel rewards cards have a break and get a good cash back card. You can find a cash back card that rewards you for buying the things you spend a lot of money on, groceries, gas, office supplies, or Amazon purchases.
An annual fee on a credit card is not necessarily a bad thing. Sometimes the rewards they offer greatly off set the fee. But that’s not true for everyone.
Not all cards have annual fees and you don’t have to pay an annual fee to get a good rewards card. Whether you want hotel points, airline miles, or cash back when you dine out, there are good no annual fee cards that will help you rack up points in those categories.
You Have a Balance
If you have gotten behind on your credit card payments, you know how fast interest starts to add up, making it even harder to catch up. If you have a credit card that you’re carrying a balance on, you need a good balance transfer card.
You transfer the overdue balance to a new credit card that has an introductory rate of 0% APR. Some of the introductory periods can be as long as 18 months! This gives you a little breathing room. You can get caught up on the balance more quickly because you aren’t paying interest charges.
You’re Making a Big Purchase
If you have something like a kitchen renovation or some redecorating plans in your future, taking out a 0% APR card is like getting a 0% interest loan. The credit card company is financing your purchase and you get plenty of time to pay it back slowly without paying interest.
You Need to Boost Your Credit Score
Having a good credit score can save you thousands of dollars in interest over the years. When you have a good one, you are offered the best interest rates on things like auto and home loans. Two of the factors that make up your credit score are credit utilization and total number of accounts.
Ideally, your credit utilization is under 20%. That means that if you have a $1000 credit limit, you have no more than $200 charged on that account. If your utilization is high, taking out a new credit card will help bring that down.
It seems counter intuitive but the more types of credit you have out and the more you have out, the higher your score in this area. All credit cards count as one type of credit but each card individually counts toward the total number of accounts.
Not all credit cards are created equal when it comes to rewards and the same is true when it comes to perks. Most of us don’t read the fine print that comes with our credit cards but if you do, you can find some good stuff!
Things like price protection which means if you buy something and find it cheaper later or from another vendor, the credit card will pay you the difference. Travel protection is another great resource if you find yourself at your destination without your luggage or in need of a doctor in a foreign country where you don’t speak the language.
If you are buying a big ticket item like a new television or computer, charge it to a card that offers and extended warranty. Some cards will automatically double the length of the manufacturer’s warranty and in some cases, even reimburse you if the item is damaged or stolen, something many manufacturer’s warranties won’t cover.
You’ve Started a Business
If you’ve decided to become an entrepreneur, you need a credit card in the name of your business. The IRS looks very unkindly on mixing business and personal expenses so having a separate credit card that you charge business expenses on is a must.
Business credit cards also offer rewards that are a great perk for business owners, things like cash back at office supply stores and telecommunications purchases.
Opening a credit card in the name of your business will also start a credit history for the business. Even if you financed the business with your own cash, that doesn’t mean you won’t need or want a bank loan at some point. That credit card will give the bank something to look at when they are determining whether or not to make a loan to your business.
Big Sign Up Bonus
Sometimes a credit card offers a sign up bonus so good, it’s reason enough to apply for that card. Chase is offering a new version of the Sapphire card called the Chase Sapphire Reserve card. The sign up bonus is an astonishing 100,000 miles which means $1,500 in free travel when you book through their travel portal, Chase Ultimate Rewards.
It’s not all that common to see even a 50,000 mile sign up bonus so travel aficionados are salivating over this offer and now you probably are too!
For Your College Kid
It’s the time of year when kids are heading off to college for the first time. For some, this means they are a long way from home and from mom and dad. This can make both the student and the parents anxious. Helping your student get a credit card can help you both rest easier. If there is an emergency, the card will be there faster than mom and dad.
It will also help your student start a credit history which is important for everything from renting an apartment to getting a car loan so they can get to work and start paying back those student loans. Of course teach your student good credit habits before you just hand over the card.
Foreign Transaction Fees
If you plan to go abroad and your current credit cards charge a foreign transaction fee, your trip is going to be more expensive than it has to be. Some cards charge as much as 3% per dollar spent when you buy things abroad.
There are many great travel cards that don’t have a foreign transaction fee. While you’re at it, get a credit card that has both chip and pin technology. They aren’t widely available in the States yet but they’re out there.
While many foreign credit card terminals will accept chip and signature cards, not all of them do and you may be out of luck entirely when you try to make a purchase at a kiosk for something like rail tickets or a bike rental. Many of these kiosks only accept chip and pin because there is not attendant to verify a signature.
Your Card is Not Widely Accepted
If you have a MasterCard or Visa logoed card, this doesn’t really apply to you. Those cards are accepted almost everywhere. But if you only have a Discover or and American Express card, not all merchants accept them and you may not have the cash to cover your purchase. Even if you love your Discover or American Express for the great rewards or customer service, it doesn’t hurt to get one of the more widely accepted cards as a backup.
Credit Cards are a Tool
Some people fear credit cards and think having one, never mind a few, is financial ruin waiting to happen. But if you use the right credit cards and you use them responsibly, you can have access to perks like cash back, travel rewards, and consumer protections that cash just doesn’t offer. If any of these reasons appeal to you, we’ve done the research for you so you can choose the right credit card for you!