As a general rule, I try not to open too many credit cards. That’s because doing so can damage my credit score. Also, some card issuers will deny your credit card application just because you’ve opened too many other cards recently.
That doesn’t mean I never get new credit cards, though. In fact, this year I’ll be opening two new ones. I went through a careful process of reviewing the card offerings out there in order to select which cards I’d open — and here’s how I picked the two that will soon be in my wallet.
1. Sign-up bonuses
The ability to earn a sign-up bonus is one of the biggest reasons why I open new cards. These bonuses can be generous, often worth hundreds of dollars.
While I generally don’t open new cards just for the sign-up bonus, I do consider a new cardmember bonus as one of the key criteria I look for. After all, if two cards offer similar rewards and perks but one will give me a few hundred dollars more than the other to become a customer, I’d be crazy to pass that up.
Of course, I also pay attention to the requirements to earn the bonus. Card companies typically require you to spend a certain amount in the first three months to get it. If there’s a great bonus offer but I’m not certain I can meet the spending requirements, I’ll pass it up.
2. Annual fees
Credit card annual fees can be worth paying. But I already have a credit card with an annual fee that provides me with generous perks, such as airline lounge access and rental car insurance.
I haven’t yet found another card with an annual fee that offers me high value perks better than my current card. As a result, this year I’ll open two credit cards that charge no annual fees.
If I didn’t have an annual-fee card already, this assessment would be different. I used to shy away from paying for a card, but I’m now convinced that if you find the right one, the perks that come with it make a great credit card with an annual fee worthwhile.
3. Rewards programs that were a good match to my spending
Like most people, my spending habits have changed as a result of the coronavirus pandemic.
For example, I’ve cut back significantly on dining out and now spend a lot more money at the grocery store. While I expect that my trips to restaurants will (hopefully) increase in the coming year, I’ve found that we enjoy cooking at home, and we probably won’t ever resume dining out at the level we did pre-COVID.
Because of this, I’ll be searching for a new credit card with generous rewards at the grocery store, as my current card’s bonus program incentivizes dining out. I also expect I’ll be driving more than flying this year, since road trips still seem like a safer prospect. So I’ll be looking for a new card that rewards gas purchases.
What’s the best way to pick a new card?
These three criteria are most important to me because I don’t carry a credit card balance, and I’m not interested in a balance transfer card or one offering a 0% promotional rate on purchases.
Ultimately, if you’re thinking about getting a new credit card, your needs may be different than mine. Carefully evaluate your goals for the card and outline the key criteria you want to look for to help ensure your next credit card is a good match for your needs.