10 Signs You Ought to Get Another Credit Card

By Damian Davila. Last updated 20 October 2014. 5 comments

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Another credit card… what, are you nuts?

Before you close this page, keep in mind that a properly managed credit card is a great way to build your credit history. For some, it may be the only way to build a credit history. There are several Americans that cannot afford to buy a house or qualify for a loan — because they don't have credit histories.

This is why you need to recognize the 10 signs when you ought to sign up for a new credit card.

1. You Are Very Young

Starting out on your own can be tough. You're doing a lot of things for the very first time: paying bills, signing up for rental agreements, and building your credit history. It is a good strategy to manage more than one credit card. All things remaining equal over the same time period, responsible spending with two credit cards will build a better credit score than spending with just one. (See also: Best Credit Cards for College Students)

2. Your Only Card Is a Store Card

Variety is the spice of life. And credit scores are no exception. For example, your credit mix determines 10% of your FICO score. In the hierarchy of debt, store cards, such as a Macy's card, are at the bottom. While it is important to have a good standing on your store card(s), if those are your only sources of credit, then you're missing out on a potentially higher credit score. Credit cards, installment loans, and mortgages are more substantial forms of debt. In this scenario, by opening a credit card you're improving your credit mix. (See also: Store Cards That Don't Suck)

3. You Want Lower Interest Rates

This is self-explanatory. If you can find a credit card with a lower interest rate, you should evaluate whether or not it makes sense to transfer your balance. For example, credit unions offer friendly credit card terms, including attractive features such as no annual fees and lower rates than banks. (See also: 9 Good Reasons to Choose a Credit Union Instead of a Bank)

Before transferring your balance, double check if the lower interest rate is only temporary. Often the lower interest rate may be valid only during a promotional period, before going up. Other companies offer only lower interest rates on balance transfers, but not on new transactions.

4. You Want to Consolidate Debt

If done properly, consolidating all of your credit cards into a single new one could help you manage debt better.

  • Most credit cards punish you with a $25 to $35 late fee if you miss a due date. It is harder to miss a single payment than several payments with different due dates.
  • If your new card has a 10% interest rate and all your old cards had a 19% interest rate, then you would be to pay down an extra $9 of principal for every $100 monthly payment.
  • Don't close your old credit cards because that lowers your average account age. The length of your credit history accounts for 15% of your FICO credit score.

5. You Can Improve Your Credit Payment History

If you are able to pay off your credit card balances every single month, then you can take advantage of the most important element of your credit score: payment history. Your credit payment history determines 35% of your FICO score. If you open a new card, use it for one and only one thing, such as paying for gas, and pay off the balance every month, and you will boost your credit payment history.

6. You Want to Rack Up Reward Points

When you are an active member of a rewards program, you could open a co-branded credit card to give your points a major boost. Co-branded airline credit cards help you rack up miles with everyday purchases. Usually they offer bonus miles for purchases with that particular airline, so choose the card that is co-branded with your favorite airline. There are also general all-purpose travel rewards credit cards that allow you to rack up miles with purchases and then redeem them for flights or hotel rooms from a variety of partners. It all depends on how you like to travel. (See also: 5 Best Travel Reward Credit Cards)

7. You Haven't Signed Up for New Cards in a Long Time

Extremes are bad. Just like opening too many cards in a short period of time would harm your credit score, not applying for new credit in a long time could keep your credit score flat. New credit determines 10% of your FICO score. If your credit score has remained the same for several years, the culprit may be that you haven't opened a new credit account for a long time. Think of this card as your opportunity to step up to the plate and show your credit management skills. Stay on the bench too long and credit agencies have no recent material to take a look at.

8. Your Only Card Is Maxed Out

Trying to pay off your maxed out card and improve your credit score at the same time may seem almost impossible. Juggling monthly payments and bills can be very stressful without the convenience of a credit card. At the same time, you don't want to fall into a vicious debt cycle.

In this situation, one way to lessen the burden is to get a secured credit card. It works like a prepaid gift card: Your available balance is only what you deposit. While a secured credit card may not require a credit check, it still reports your credit management activity to the three credit bureaus. Not all secured credit cards are the same, so check the rules before signing up.

9. You Travel Internationally (a Lot!)

Your credit card may have great terms for domestic transactions but the minute that you spend abroad you may get dinged with one or more of these fees:

  • Flat fee per foreign transaction;
  • Percentage fee for total purchase amount (usually 1% to 3%);
  • Foreign currency fee;
  • ATM fee;
  • Balance inquiry fee; and
  • Penalty fee for failed transactions.

On top of all of these charges, your domestic credit card may have a daily limit and require you to call in advance to prevent the card from being blocked when used abroad. This is why you need to get a new (and hassle free!) credit card that you can use on your international travel.

10. You've Been a Victim of Identity Theft

Victims of credit card hacks, such as those stung by the Target hack in 2013 and Home Depot in 2014, may not only have to freeze their credit reports but also to shut down their compromised credit cards. (See also: The World's 4 Biggest Credit Card Scams)

In this case, you would have no other option than to sign up for another credit card to prevent any further damage to your credit score and history.

What are other signs you ought to get yourself another credit card? Please share in comments!

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

Guest's picture

I have 1 credit card for online purchase. One store card (Costco, and they don't take anything else I use), and one backup card for when my credit card company decided to put my card on hold whenever I decided to buy 20 e-books at once, and it breaks my normal spending habit (yes, they're supposed to help me with that, but I monitor my credit card spending more carefully than they do).

Damian Davila's picture

Costco only accepts American Express credit cards, which can be inconvenient if you're looking to maximize points from certain reward programs.

Regarding your other card, have you looked into increasing your limit? It sounds so inconvenient that you have a hold every time that you buy your e-books. A credit line increase might solve the problem. What do you think?

Guest's picture
JoAn V.

I got a new card when the bank that I had my Visa with sent me a letter notifying me that they would begin charging me an annual fee if I didn't start using my card more frequently. Since I only use it for online orders or for big ticket items (then pay it off), I felt like I was being penalized for being mindful of my spending.

Damian Davila's picture

Sorry to hear that Joan. There are some cards that charge an annual fee and others that don't. I have found that most that don't are the ones offered by credit unions. However, to become eligible for one, you have to first become a member of the credit union.

Guest's picture
Alex @ CreditCardXpo

Getting a new credit card to consolidate debt is a great one. With so many credit cards that offer 0% interest on balance transfers for up to 18 months, it's great to consolidate debts and give yourself more time to pay off the debt without paying any interest charges.

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