Apply for New Credit Card?

{{credit}}The typical American carries between five and ten credit cards in their wallet - with even more open accounts that they no longer use. Thousands of Americans open their mailboxes each day to find even more credit card offers promising to lower the cost of borrowing. The appeal is hard to pass up, especially with a 0% APR, no fee balance transfers and travel rewards. In many cases, another credit card may offer advantages that can save you money. But just how much will a new credit card affect your family, credit history and financial future? There's no definitive number of credit cards a person should have or use. However, before you apply for a new credit card, consider the following:

Your Ability to Pay

The most important consideration when looking for a new credit card is whether you can afford to borrow more money. If your current debt-to-income ratio is less than 36%, lenders will continue to consider you for additional credit. When you consider that the average household carries over $12,000 in credit card debt (not including long-term debts like auto loans and mortgages) adding additional lines of credit should be carefully thought out. Spending more than 36% of your income on repaying your debts may cause hardship in other financial areas and make paying those same debts on-time more difficult.

Ratio of Debt to Your Credit Limit

When considering a new credit card offer, be sure you're not using more than 45% of your current available credit. If your debt is higher than 45%, you're placing your financial future at risk and it may raise a red flag to potential creditors about your ability to repay in the event, if a major financial obstacle.

Credit Score Effects

Having multiple credit cards does not affect your credit score except when your debt-to-available credit ratio is high. But the effect of opening multiple, new credit card accounts within a short period of time will have a negative impact. Plus, juggling too many credit cards may cause confusion, especially when it comes to paying the monthly bill on time - any late or missed payment will result in a non-favorable judgment on your credit report.

Simplified Overview

Before you apply for a new credit card, always make sure you can pay the bill and on time - each and every time. Secondly, never ask for additional credit if you're already struggling with the debt you currently have. And lastly, consider the impact that additional lines of credit will have on your credit score. By focusing on these areas, you will be able to enjoy the benefits of a new credit card offer without the worry of overextending your finances.{{/credit}}

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