If you’ve had the same credit card your whole life, it might be time for a change. A new credit card may come with all kinds of benefits, from unbeatable sign-up bonuses to better rewards earnings. Plus, applying for a new credit card may even boost your credit score. Keep reading to discover the top 4 reasons to get a new credit card.
1. You can take advantage of sign-up bonuses
Nowadays, most credit cards come with impressive sign-up bonuses. In an effort to attract more customers, banks will offer everything from cash-back bonuses and shopping perks to extra rewards points and no annual card fees in the first year. Plus, if you meet the minimum spending limit in the first few months of getting the card, you will likely be rewarded with an even bigger bonus (sometimes, bonuses can be worth hundreds of dollars).
2. You can earn more credit card rewards
If you haven’t purchased a new rewards card in a while or only have one category of rewards card (such as a travel or retail card), it might be time to research what’s out there. As the credit card market becomes increasingly competitive, credit card issuers are offering even better rewards-earning structures. For example, some credit cards offer a great earning rate when you use your credit to shop for certain categories of items, such as groceries, gas, plane tickets, or recurring bills.
3. You can improve your credit score
A common misconception about opening up a new credit card is that doing so will hurt your credit score. The reality is actually the opposite. Whether you already have a high credit score or are looking to improve it, getting a new credit card can help. This is because anytime you open a new credit card, you create a new line of credit, which positively impacts your debt utilization ratio.
Your debt utilization ratio is calculated by dividing your total credit card limit (across all cards you own) by your existing credit card balances. Keeping your debt utilization ratio under 30% can improve your credit score. Since opening a new credit card increases your overall available credit, doing so can lower your debt utilization ratio and raise your credit score.
4. You qualify for a better interest rate
If you tend to carry a balance on your credit cards, you will benefit from finding a card with a low interest rate. You might be surprised to learn that you are eligible for a card with a better interest rate, especially if your credit score has improved since you opened your last card.
Even if your credit score hasn’t improved significantly, opening a new credit card might allow you to take advantage of a generous promotional rate. For example, some cards offer introductory 0% annual percentage rate (APR) financing, meaning you can charge purchases to your new card and pay off your debt during the promotional financing period without paying any interest.
Even though it’s temporary, this can still be extremely beneficial to cardholders.