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When should you apply for a new credit card?

With every new year comes reflection and resolve; for many of us, part of that self-improvement plan we promised ourselves might include ditching that high interest credit card for a new, flashier, credit card.

But whether it's the new year or not, sometimes it's simply time to upgrade and apply for a new credit card. So...when exactly is that time? 

1.) You're paying the minimum payment on your credit card bill each month...and it's not getting you anywhere

This is the perfect scenario for a balance transfer. If you find that you're essentially just paying back interest on your credit card balance each month, then it's time to seriously consider opening up a new credit card with a 0% interest period on balance transfers.

Choose the balance transfer credit card that best fits your wants/needs, and move your credit balance over to your new card to start paying back your credit debt directly. This is the best way to start lowering your credit debt, which consequently will lower your credit utilization ratio and improve your credit score. Win/Win/Win!

2.) You've got bad credit

Wait, what?

If your credit is poor or below-average, then consider applying for a credit card for rebuilding credit to jump-start that New Year's Resolution to improve your credit score. We recommend secured credit cards to get the ball rolling, but there are some legitimate unsecured options, too.

Bad credit credit cards can help you improve your credit in a lot of ways; they build your credit history, show lenders you're looking for a fresh start with a new credit account, and can lead to unsecured offers down the line.

If you have poor credit, then it's time for you to consider applying to a new credit card.

3.) You graduated college

If you own a student credit card but graduated college recently, first off, Congrats! And second, great work building your credit score early - that will pay huge dividends down the line.

That said, if the student credit card you started with is still charging you huge interest fees and next to nothing in rewards, then it's time to upgrade. Now that you have an established credit history and you've worked up a strong credit score, then you're much more likely to be approved of some top-of-the-line credit cards than you were during your first foray into credit.

Do your homework (we know, you thought you were through with homework), decide what type of credit card you want in your wallet and make the transition. Again, new lines of credit and a lower credit utilization ratio will improve your credit score. Combined with the fact that you're going to get a new, better credit card means there's no downside to applying for a new credit card post-college.

OK, so these are all really good reasons to apply for a new credit card. What's NOT a good idea is to apply for a credit card in hopes of purchasing a big-ticket item. In fact, that's a terrible idea and could be a credit/personal finance killer. Don't do this!

When it comes down to it, applying for and receiving a new credit card is often a positive move, so long as you have the right intentions. If any of the above situations sound familiar, then check out our credit card search tool  and let us match you up with the right card for you.

on Fri, 2013-01-11 09:15