When to apply for a credit card

Whether you're applying for your first credit card, or you want to add another one to your wallet, timing is important. Before applying, you should decide why you want a credit card. Are you ready to start building credit? Do you know the ropes and want another credit card for points or bonus offers? Whatever the reason may be, understanding why you want to apply is as important as when to apply for a credit card.

When should you get a credit card?

If you're trying to decide when to apply for a credit card, keep your goal in mind because that will help determine the time that's right for you.

Here are some of the times when it can be a good idea to apply for a credit card:

You want to start building credit

Using a credit card responsibly is an effective way to start building your credit. For students and young adults, having built your credit pays off when it's time to rent your first apartment or buy a car.

Opening a new credit card increases your current line of credit. This gives you the chance to establish a positive payment history by paying your bill on time every month. Payment history is an important factor in your credit health and credit score. However, missing a payment may hurt your credit score, so remember to pay on time each month.

When you use a credit card and pay on time, you're also affecting your credit utilization ratio, another factor that helps determine your credit score. You can maintain a healthy utilization ratio by reducing or eliminating your balance every month and not maxing out your card.

Applying for your first credit card may feel intimidating, but learning how to use a card responsibly doesn't take long. You can apply online whenever you're ready.

You plan on making a big purchase

If you have a big purchase in mind, there are advantages of having a credit card. On the one hand, a credit card gives you an opportunity to finance the purchase as you pay your bill each month. On the other, making a big purchase with your credit card may earn you points and rewards.

Many card issuers offer zero percent introductory APR periods that are beneficial if you plan on paying the balance before the introductory period ends. With zero percent APR periods, you won't be charged interest for a certain amount of time, giving you an opportunity to pay for your purchase over the interest-free period.

In general, purchases on many credit cards earn you points or rewards. However, the reason you might want to time your credit card application with a large purchase has to do with sign-up bonuses. A sign-up bonus typically offers you cash back, reward points or a statement credit when you spend a certain amount of money during the first months your account is open. A spending requirement can be a large dollar amount and easier to meet by making a big purchase.

You have debt to pay off

A balance transfer may be appealing to those who are struggling to pay off credit card debt. If this sounds similar to your situation, you might want to consider applying for a new credit card. In this case, you'd look for a card that has a lower interest rate or one that offers a zero percent introductory APR period. Making payments on a balance that doesn't accrue interest can help you pay down debt.

The best time of year to get a credit card

If you're looking for the right time to submit a credit card application, towards the end of the year may be an exciting time to do so. Similar to when you use a new card for a big purchase, the advantages of having a credit card at the end of the year may rely on your holiday shopping.

The spending requirements for these bonuses usually have to be met in the first few months after the account is open. Holiday expenses may help you meet these requirements and land an appealing sign-up bonus.

Advantages of having a credit card

• Convenience: When you have your credit card on hand, you don't have to worry about how much cash you have on you or in your checking account. Credit cards also put purchases in specific categories, which could add some convenience to how you manage your finances.
• Credit card rewards: Who doesn't love rewards? Rewards credit cards give you an opportunity to earn points and rewards with purchases you make. Different rewards programs offer different perks. You may earn points that you can redeem for cash back, gift cards, travel and more.
• Fraud protection: Keeping your finances safe is part of managing your finances responsibly. Fortunately, credit cards often come with a form of fraud protection against unauthorized transactions. If you notice any transactions that you don't recall making, many credit card issuers won't hold you accountable if you report or dispute transactions immediately.
• Purchase protection: The purchase protection feature is a big advantage of credit cards. Eligible items purchased with your card may be repaired, replaced or reimbursed if they are stolen or damaged.

Your credit cards can be an essential financial tool when used responsibly. There are many advantages of credit, and having a credit card isn't a short-term commitment. It's important for you to consider your goals and lifestyle when choosing the right time to apply for a credit card.