If you’ve never had a credit card but are looking to apply for one for the first time, careful consideration is always commendable. Knowing the benefits or opportunities that accompany credit spending can help you identify the best credit card for your needs.

But applying for a credit card requires good timing just as much as it does preliminary research. And not just because feeling confident in your decision makes the sometimes-turbulent process much easier on the nerves. If you time your credit card application well, you may be able to enjoy competitive rewards or points offers on your new credit assets. 

Thankfully, we’re here to help you make the right decisions when applying for a new credit card. This guide walks you through when you should and shouldn’t apply for a credit card. We’ll be covering nitty gritty details like referral bonuses or preapprovals, and the role that a balance transfer credit card may play in switching from one credit card to another.

You should apply for a credit card if:

You can transfer your amounts owed

When you have a balance to pay on a credit with a high interest rate, applying for another card can help. It sounds counterintuitive, but certain cards (balance transfer cards) allow for you to transfer the existing amount owed over to your new card. 

In short, this provides you with the opportunity to pay off existing debts with a lower interest rate. And it’s even better if the card offers a no-interest introductory period, because then you can keep your balance level for three, six, or even twelve months (or however long your introductory interest-free period may be). Just make sure to calculate the rates properly, and check any rate changes that might crop up after the first year.

You have to make many purchases or a big one

While credit cards do have extremely-high monthly interest rates, often a new card will offer a period where you’ll be charged no interest at all for a handful of months. So if you were planning to take a loan out or borrow money from lenders, or have a big shopping season coming up – like Christmas – you might save more money by using a new card instead. Just be sure to pay back the purchase in full before the introductory period is up, and know that cash withdrawals will be exempt from this bonus.

You’ve received a pre-approval

Although a pre-approval letter isn't a golden ticket, or even a surefire guarantee that your application will be accepted, it can strengthen your chances of securing premium credit cards or cards that offer competitive rewards. Pre-approval letters are simply an invitation to apply because you’ve met the first set of criteria outlined by a credit provider. This criteria may include things like a good credit score, consistent income, and so on. 

Simply take it as a good sign that you’re suited to using a credit card, and that you’ll likely be accepted if you consider applying for a credit card with that provider in question.

You’ve received a referral

A referral is similar to a pre-approval in that it doesn’t guarantee a successful application, but it has its benefits. Often referrals will give you and your referrer a bonus of cash or loyalty points, so it’s always worth trying for one if you’re considering a new card.

You shouldn’t apply for a credit card if:

You’re applying for a mortgage or home loan

Each time you apply for credit, an inquiry will be made into your credit score. Whether the results are good or bad, these hard inquiries briefly drop your credit score. A lower credit score will not only affect whether any upcoming loans are approved, but will also affect the terms and rates of those loans. So if you’re planning to mortgage your house or take out any other kind of loan, you should space out these applications by about a year (though the exact timing can change).

You’ve recently made similar credit applications

If you’ve applied for a credit card or any other type of credit in the last six months, the hard inquiries made into your credit score will still be on your report, and will still be reducing your score. Six months is the gap you should have between credit applications, and a year is even better as that’s when you should see your credit score return to normal. 

You’re not financially secure

The benefit of a credit card is not that you get access to more money – it’s that you have new methods of spending your own money. In fact when you note the annual fee, it’s a noticeable trade off. You pay cash now then enjoy rewards and financial flexibility for a year. If you have untransferable debt, however, it may complicate your ability to spend credit sustainably.

If this is a situation you’ve found yourself in, then applying for a new card may not be the right move for you. However, we do encourage you to consult with a financial specialist or advisor before making any decisions as to whether you do or don’t apply for a credit card. Procuring expert insights will certainly never hurt.

Conclusion

A credit card can aid your financial goals by providing a buffer and benefits for your lifestyle, but it’s not without its drawbacks, and an informed decision is required. Take some time to weigh the costs and benefits, and consult others if possible. When you’re certain the benefits outweigh the annual fee and various risks, you can apply with confidence and enjoy your newfound rewards and bonuses.