When To Get A Second Credit Card?
Considering getting a second credit card but not sure whether you should take the leap? Read on to discover whether you’re in the right position to do so.
If you have managed to own and use a credit card in a responsible manner and have managed to meet your monthly payments with regularity, paying on time and in full, you would and should be able to apply for a credit card.
Alternatively, if you’ve maxed out a credit card that has a high rate of APR and your interest charges are counting to build, you could consider transferring your debt to a card that has a 0% balance transfer fee in order to resolve your financial situation.
There are undoubtedly options when it comes to obtaining multiple credit cards and whilst a second card may help to improve your credit score, it isn’t the right option for everyone. A list of situations in which you should avoid getting a second credit card are as follows:
If You’re Struggling To Pay Off The Credit Card That You Already Have
It will be better for you to stick with owning just one card if you are struggling to pay off the debt on the one that you already own. Whilst two cards may allow you to spread out the charges more evenly, it will also provide you with double the opportunity to become laden with debt. You should always, ideally, be in the routine of paying off a credit card in time and in full before you are considering taking on another credit card.
If You Think That A 0% APR Offer Will Absolve Your Debt Issues
If you’re running up your balance on one credit card and you come across an offer for a card that has 0% interest for 18 months, it may be notably appealing, but you should refrain from signing up for a second card if you know that you aren’t going to be able to pay off your original balance within the promotional period on offer.
It will just add further hassle at a later date and if you do not pay attention to the terms and conditions of the balance transfer deal, you will only end up in a greater level of debt.
If You Are Looking To Buy A New Car/Home
If your only reason for obtaining a second credit card is to buy a new car or apply for a mortgage, this is not a great position to be in. This is because after the first year of your application for a credit card, that card will appear in the ‘new credit’ section of your credit report which depletes your credit score.
If you wait for a year after obtaining the credit card and then make the purchase application, the card will not appear new anymore and this will, alternatively, benefit you and your score.
Conversely, there are many reasons why a second credit card may be the best option to suit your situation right now. These reasons are as follows:
To Improve Your Credit Score
By having more than one credit card, you can prove that you are able to manage debt and meet credit card obligations. It also increases the total amount of credit that becomes available to you which, if unused, raises your FICO score drastically.
If You’re In Need A Backup In Case of Emergency
Medical bills can be impossible to manage and this is one option where a second credit card may be the best way forward. If you lose your credit card, most companies will replace your card within 72 hours but you may need your card to pay a bill within this time, a new credit card can therefore act as a guarantee that you’ll be able to make payments on time without incurring other charges if your credit card becomes lost or is stolen.
To Enhance And Diversify Your Card Benefits
If your first card is just a charge card, a second card could perhaps act as a rewards card. Or, if you already have a rewards card that is related to travel, you could use a second one that is related to receiving cash back. You can alternate cards to balance out what you are not receiving from the other and in turn, reap the full benefits of owning both.
What To Look For In A Second Credit Card?
Once you’ve analysed your own situation and determined that a second credit card is the best solution for your circumstances, then you should consider the following points before making any rash decisions:
Take Note Of The Annual Card Fee
Annual fess will range from $0 – $500 and this should not be overlooked. You should consider your spending habits and whether you are really going to be able to take advantage of the benefits of the card rewards. If you’re not then you should definitely stick to a $0 annual-fee credit card.
Read The Full Terms And Conditions (The Fine Print)
Having a good knowledge of the APR and interest rates on your credit cards is crucial as these will vary. Most cards will promote a different range of APRs and you won’t even know what your actual APR is until you have been approved for the credit card so be aware that your balance could become increasingly expensive if you are not paying off your bill in full (or to a large extent) every month.
To conclude, you should always be selective about the second credit card that you are obtaining as the APR and interest fees will vary from card to card and you could end up worsening your debt and credit score without realizing.
If you are in a position where you feel as though you can meet the demands of having more than one credit card, then you should get a second card that offers you a range of benefits that you can maximize.
However, if you are really struggling to pay off the debt on your first card, then perhaps consider a card with a 0% transfer fee and that comes with less benefits and no annual fee as this will be your safest option when taking on a second card. The decision is yours but choose wisely!