Why It Pays to Wait Before Applying for a New Rewards Card

When I got my first credit card, the only incentive I was offered was a two-liter bottle of soda. That was enough to get me to pause at the table set up on my college campus and fill out the paper application. Nowadays, bonuses for getting a new credit card can be much more substantial. It’s not uncommon to be able to take an international flight using the bonus miles or points from just one new travel rewards credit card.

Once you try this and see how easy it is, it can be tempting to just keep going and going, applying for more and more credit cards and reaping the rewards. That’s not as crazy as it sounds. While the average American has only two to three credit cards, I have about a dozen open at any given time. But even I, an admitted credit card nut, take a break now and then. I haven’t applied for a new card in several months, and have recently passed up some attractive card offers.

Here are some reasons to postpone a new credit card application.

1. You already have one of the benefits offered

I was recently tempted by a new card that offers, among other perks, elevated status at a hotel chain. I decided to hold off on applying, despite the attractive points bonus offered, because I already have that status at that hotel chain through another card. If I ever cancel the other card, then I’ll apply for this hotel card. (See also: Best Hotel Rewards Credit Cards)

I’m also not applying for any cards that offer airport lounge access at the moment, because I already have that covered through another card.

2. You’re holding out for a better offer

I passed on another offer recently because a friend who is even more into credit cards than I am told me she had received more points when she applied. Credit card offers go up and down. There’s no guarantee that the higher bonus my friend received will come back, but I decided to bide my time and see if it does.

In order to do this, of course, I’ll need to keep an eye on the card’s marketing offers. Most blogs about points collecting, such as One Mile at a Time, maintain lists of hot offers. If you have a friend who already has the card you’re eyeing, you can also let them know that you’re looking for a better offer, because they might receive marketing emails notifying them when a good deal comes along and encouraging them to get friends and family signed up.

3. You are about to apply for a mortgage

People often assume that having a lot of credit cards will cause your credit score to nose-dive. While it’s true that the number of recent applications can have a negative impact, it’s a smaller impact than things like missed payments or owing too much money overall, explains industry veteran Barry Paperno, who writes about the ins and outs of borrowing at Speaking of Credit.

“There are only so many points that you can lose because of inquiries,” Paperno says.

This matches my experience, since even when I applied for a dozen credit cards in a week while I was gathering up points to take my family to Australia, I never saw my credit score plummet. It might have lost a few points.

Inquiries also only impact your credit reports and scores for a limited time. Different credit bureaus and scoring products do things slightly differently, but generally a credit card I apply for today is only going to affect my credit for one to two years. (See also: The 5 Things With the Biggest Impact on Your Credit Score)

So if you’re not getting ready to make an important borrowing move, you probably don’t need to worry about the effect of new cards on your credit. But if you’re about to refinance or buy a new home, why take chances? Especially if your credit score is close to not being adequate to qualify for the best loans, you’ll want every point you can get.

4. You’re having trouble keeping track of the cards you have

If you find yourself missing payments, not because you can’t afford them, but because you forgot about a credit card account, it’s probably not a good time to take out more cards, no matter how lucrative the sign-up bonus. Instead, take an inventory of the cards you have and cancel any that you are no longer using, and you can venture into new card applications once you’ve got everything under control.

5. You don’t have enough expenses coming up to meet the minimum spend

Most credit cards that offer thousands of sign-up bonus miles or points require you to put a certain amount of spending on that card within a set time frame, often the first three months. Many cards require a $3,000 spend, but some business cards require as much as $10,000.

Don’t bite off more than you can chew. If your normal expenses only allow you to charge about $500 a month, and you don’t have any extraordinary expenses coming up such as a child’s camp tuition or a planned furniture purchase, are you really going to spend the required amount of money in the next few months? If you don’t make the spend, you won’t get the bonus. And you certainly don’t want to spend money you wouldn’t have otherwise spent on something you don’t need, just to get the bonus. (See also: Don’t Make These 6 Credit Card Signup Bonus Mistakes)

6. You probably won’t qualify for the bonus or the card

You’ll of course want to make sure your credit score is high enough that you’re likely to be approved for a rewards credit card. (See also: What is a Good Credit Score and Why Is It Important?)

But there are other qualification rules to pay attention to as well. Different card issuers have different rules. Some will only let you get a limited number of cards from them, no matter what the specific card product, while others may let you have every variety of card they issue, but only once. Some companies will issue you the same type of card you had before, but will only give you the bonus once.

If you’re signing up for a card to get a bonus, make sure you know the card issuer’s rules and are within them. You’re wasting your time — and a credit inquiry — if you’re applying for cards that you either will not receive or will receive without the full benefits you were expecting. (See also: 6 Pitfalls to Avoid When Chasing Travel Rewards)

7. You can’t afford the annual fee

Most credit cards that offer generous sign-up bonuses charge annual fees. Some cards waive the annual fee for the first year, while others charge it upfront. In my experience, the benefits such cards offer, in points-earning opportunities and perks, usually outweigh the cost of the annual fee.

However, if you can’t afford the annual fee, don’t rationalize the application by telling yourself about all the perks you’ll get in exchange. If you can’t afford the fee, chances are you may not be doing the traveling that would allow you to use those perks anyway. What good is free entrance to an airport lounge if you can’t afford to fly anywhere this year? (See also: Best Credit Cards With No Annual Fee)