86% of Consumers Don’t Plan to Open a Credit Card in 2023. Here’s Why That’s a Mistake

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If a new credit card isn’t part of your financial plan this year, you may be missing out. 

For most people, opening a credit card is a fairly rare occurrence. That’s unfortunate, because credit card companies often save the best perks for new customers. A new credit card could be your ticket to a big bonus or other valuable benefits.

Even though there’s a lot to gain by shopping for a new credit card, a recent study found that most consumers aren’t planning on doing it anytime soon. Only 26% of consumers said they had plans to seek any type of new credit in the next year, according to TransUnion’s most recent Consumer Pulse Study. Of that group, 53% planned to apply for credit cards. That means in total, 14% of consumers planned to get a credit card this year.

If you’re building your credit score right now, then holding off on any new cards is probably for the best. But if you have a solid credit score already, not exploring new card options could be costly.

How you could benefit by opening a credit card

When you have a credit card you’re happy with, you might feel like there’s no reason to go shopping for a new one. It’s still wise to keep an eye out for other options, for a couple of reasons.

For one, the credit card market is competitive, and it changes often. Credit card companies sometimes launch completely new cards or improve the benefits on old ones. There might be a card available that’s a better fit for you than what you currently have. Maybe an incredible new card just launched, or an older card got a big upgrade.

Even if not, there’s another reason why a new card could be a good idea — introductory offers. Many top credit cards have one or both of the following:

Sign-up bonuses that new cardholders earn after reaching a spending requirement0% intro APRs that apply to purchases, balance transfers, or both

These perks can be extremely valuable. If you want to boost your credit card rewards, sign-up bonuses are often the fastest way to do so. To provide a typical example, a sign-up bonus could offer 50,000 points if you spend $4,000 in the first three months. Without a bonus, you might earn an average of 2 points per $1 on your purchases. That means it’d take $25,000 in spending to earn the same amount of points.

There are plenty of big sign-up bonuses available. That’s why opening a new credit card on occasion is a simple, effective way to earn more rewards.

A 0% intro APR can also be valuable, albeit in a different way, as it helps you avoid interest charges. If you don’t have enough in your savings to cover a purchase, you could get a card with a 0% intro APR on purchases and pay off that expense interest free. Or, if you’re in debt, you could look at balance transfer credit cards. These have a 0% intro APR on balances you transfer over, so they give you an interest-free period to pay down debt.

When not to open new credit cards

While opening a new credit card has its benefits, there are some situations where it’s not the best idea. Here’s when you should avoid new credit card applications:

You’re trying to raise your credit score. Credit card applications can temporarily lower your credit score. The application will put a hard inquiry on your credit file, and the new card will lower your average account age. If your goal is a higher credit score, focus on that and keep credit applications to a minimum.You’re planning to apply for a loan soon. When you’re approved for a mortgage, auto loan, or personal loan, the lender uses your credit score to determine your loan’s interest rate. Before applying for a loan, avoid anything that could lower your credit score, like credit card applications. This could get you stuck with a higher interest rate and a more expensive loan.You have credit card debt. Because of how costly credit card debt can be, the priority should be to pay it off as quickly as possible. A new card could distract from that and even cause you to go further into debt. The only exception is if you’re applying for a balance transfer card that you’ll use to refinance your credit card debt.

If none of those situations apply to you, then you’re likely in a good position to apply for a new credit card. You don’t need to look for new credit cards all the time, but it is good to get in the habit of doing so every six to 12 months. You might find a card you really like, or one with a juicy bonus opportunity.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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