3 Top Signs You Need a New Credit Card

For some people, getting a new credit card isn’t a big deal. We can call them “credit card enthusiasts”. For these people, the only thing standing in the way of getting their next card is removing a hard inquiry from their credit report.

In addition, there are those who are shy about getting new credit cards. These people may consider getting a new credit card as much of a responsibility as getting a new dog. They may object that this may contribute to overspending. At least I don’t need to two credit cards, some may add.

If you’re in the latter group, I’m not going to convince you to jump on the bandwagon of credit card enthusiasts. However, I will say that getting a new credit card can also have additional benefits that will improve your financial situation. On that note, if you agree with any of these three signs, a new credit card might be worth it.

1. You only earn 1% on your biggest spending categories

One or two credit cards are usually enough to earn bonus rewards in the highest spending categories. However, if you’re only making 1% in your top categories right now, you’re leaving money on the table.

The best credit cards will earn at least 2% on total spending, while others may earn 5% or more on certain spending categories. If you don’t want to carry multiple cards, I recommend getting one card that earns a competitive flat rate on all spending (like 2% cash back) and one card that earns 3% to 5% on your biggest spending categories.

For example, the Wells Fargo Active Cash® card (see rates and fees) earns unlimited 2% of total spend. This credit card is super easy to manage because you earn the same rate on everything you buy. If you have never had this card before, learn how to claim a $200 reward bonus p $500 in first 3 months.

Similarly, a card that supports this is the Chase Freedom Flex®. This card earns 5% back on bonus categories up to $1,500 in quarterly spending once activated. It also returns bonus money for the following:

• 5% back on travel purchased through Chase Ultimate Rewards
• 5% back on Lyft rides through March 31, 2025
• 3% cashback on dining at restaurants, including takeout and orders through eligible delivery services
• 3% back in pharmacies

All of these rates combined with the 2% cash back from the Wells Fargo Active Cash® Card can create a steady cash flow. Check out the other best cash back credit cards to see which combination will give you the best results.

2. You can benefit from interest-free financing

If you don’t have a balance on your credit card, you have no reason to worry about the interest rate on the card. However, if you have a balance or plan to in the future, the APR becomes an important factor to consider.

The point is that credit card interest rates are high. as, extremely high According to data from the Federal Reserve Bank of St. Louis, the average credit card interest rate in May 2024 was 21.51%, which was significantly higher than in May 2022 (15.13%). There’s a reason credit card debt is so common: Once you rack up a high balance, the APR on your card will only add to the debt, making it harder to get out.

If you have a high balance on your current credit card, you can use a balance transfer credit card. These cards usually offer a promotional rate, such as 0%, for a specific period, such as 15 or 18 months. During this time, you pay no interest on your balance, giving you time to pay off your debt.

However, transferring your balance is not free. You will pay a balance transfer fee to transfer debt from one card to a balance transfer card. Usually the fee is from 3% to 5% of the transfer amount. Even with the fee, it may be worth initiating the transfer to save on interest.

3. Your credit score has improved significantly

Finally, an improvement in your credit score may signal that it’s time to start looking for new credit cards. This is especially true if a poor credit score has prevented you from successfully applying for rewards cards in the past.

Many premium credit cards only accept applicants with good credit. While a credit score isn’t the only factor in getting approved, it plays an important role in advancing your application.

You may even have a secured credit card now that has helped you improve your credit score. If your score has grown significantly since you’ve had the card, a new, improved credit score may allow you to upgrade to better cards with more rewards.

Again, I understand that most people aren’t credit card fanatics: they only need one or two cards at a time. However, if any of these reasons appeal to you, it may be time to replace your old card with a new one.