If you’re in the market for a new credit card in 2022, there’s no shortage of options. While you may be eyeing a few offers with large sign-up bonuses, there are other factors you should take into consideration.
Instead of focusing on how much the offers and bonuses are worth, the most important thing is to assess how adding another credit card to your wallet will impact your spending, financial experts tell CNBC Make It. As generous as a sign-up offer might be, it isn’t worth having to spend above your means.
Here are three factors to take into consideration to help you make the smartest decision for yourself.
1. Make sure the card lines up with your existing spending habits
No matter how tempting a credit card’s sign-up bonus may be, if the card doesn’t make sense with the way you already spend money, it’s not worth getting, says Matt Schultz, a credit card expert at LendingTree.
“The best card for anyone is the one that fits their lifestyle and helps them get what they want without them having to do any more unnecessary spending,” he says.
A person who generally carries a balance probably shouldn’t be shopping around for a rewards card. A balance transfer card is likely a better fit. Likewise, someone who spends most of their disposable income on travel probably wants to look for a card that specifically focuses on travel benefits.
“Think about what you use a card predominately for,” says Shannon Mclay, founder and CEO of The Financial Gym. “That’s going to determine what kind of card you’re looking for.”
2. If there’s a sign-up bonus, look at the minimum required spending
Just because a credit card offers a generous sign-up bonus doesn’t mean earning the bonus is in your best interest. While it may amount to free money for some consumers, it may force others to spend above their means.
“You could sign up for a credit card because you want the 100,000-point [bonus], but you may have to spend $4,500 in three months to get it,” McLay says. “If you’re not currently spending that much, then you’re going to get into credit card debt that you can’t get rid of.”
She advises her clients to read the fine print of any offer they’re thinking about taking and coming up with a plan to ensure that they can spend responsibly and still receive the reward.
If you’re unsure, calculate the value of the bonus — a good rule of thumb is to treat each point as one penny — and assess whether it is worth any increase in your average monthly spending you’d need to make. Here’s a full breakdown of how to calculate whether a credit card’s sign up bonus is worth it.
3. Be prepared to keep track of multiple cards
Having multiple credit cards can mean juggling multiple payment dates, annual fees and rewards categories. But the most important thing, McLay says, is keeping an eye on your spending.
“If you’re using multiple credit cards at the same time, it makes it more difficult to track your expenses because they’re happening in two or three different places,” McLay says.
She recommends using only one credit card at a time for the majority of your spending, while keeping your other credit cards active with easy-to-track charges like monthly subscription memberships. This makes it easier to ensure you don’t miss a payment and harm your credit score.
“It only takes one payment that’s 30 days or more late to do real damage to your credit,” Schulz says. “When you have multiple credit cards, it’s not difficult to end up struggling to make sure that you keep track of the various payments, due dates and things like that.”
He recommends immediately signing up for autopay if you get a new card, and says that adding text and email alerts for due dates can also be helpful.
If you decide to sign up for a new card, you should also make sure to follow best practices including keeping a low credit utilization ratio and paying off as much of your balance each month as possible.
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