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Should You Get a Credit Card?

7 min read

Last Updated: November 21, 2024

Table of contents

Key Takeaways

A credit card may help you finance a large purchase, build credit history, and earn rewards.
Credit card purchases may be more secure than some debit card purchases, due to fraud protections.
If you struggle with overspending or have lost your job, it may not be the right time to open a credit card account.

A credit card may be a powerful tool for building credit history and meeting your financial goals. A credit card may be a convenient way to pay for and earn rewards on each eligible purchase, but it’s also a significant responsibility. Opening a new credit card account when you’re in a challenging financial situation or before you’re ready to manage debt could be a recipe for trouble. Taking a step back to consider your current situation and needs may help you determine whether it's the right time for a new card.

When should you get a credit card?

Under the right circumstances, a new credit card may be a welcome addition to your wallet. Here are some reasons you may want to apply for a new credit card:

You’re interested in credit card rewards

Unlike a debit card or cash, a credit card may help you earn rewards. Some credit cards offer cash back or miles on each eligible purchase. You may redeem those rewards to help you cover expenses or pay for travel, depending on the type of card and the terms of your credit card agreement.

A card with a high rewards rate for your everyday purchases may help you earn the most rewards. For example, with the Discover it^® Chrome Gas & Restaurant Credit Card, you may earn 2% Cashback Bonus^® at gas stations and restaurants on up to $1,000 in combined purchases each quarter, automatically.¹

To maximize your rewards, try to keep your credit card balance low. Interest charges may offset the cash back you earn.

You want to build good credit

A credit card may help you establish good credit, as long as you use it wisely. It may seem difficult to open a credit card account if you don’t have a long credit history. However, many credit card issuers offer options for new credit card users. Student credit cards, for example, may help young adults enrolled in college begin their credit journey.

If you’re not a college student, a secured credit card may be an option. Secured credit cards require a refundable deposit when you open your account to secure your credit limit. Your credit limit typically equals your deposit amount. Like a traditional credit card, a secured card gives you access to a line of credit. As long as your card issuer reports your activity to a major credit bureau, it should appear on your credit report and influence your credit score. If you keep your balance low and make on-time payments each month, a secured card may help you build credit history.

Using secured and student credit cards responsibly may help you access other forms of credit in the future, like premium credit cards, auto loans, and home mortgages.

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You already have good credit

Maybe you’ve had a credit card for a long time and already established a good credit history. You might want to apply for a new credit card with premium features.

With a strong credit score, you may qualify for a broader range of credit card options than someone just starting out. To narrow your options, you might consider a new credit card that complements your existing cards by offering rewards you might not already be getting. For example, if your current card offers rewards on everyday purchases like groceries, a travel credit card may be a good fit. Just make sure you’re prepared to manage multiple credit cards before opening another account.

You want to make a large purchase

If you’re planning an international vacation or need to replace your couch, you may consider charging it to a credit card to break the expense down into monthly payments. Applying for a new card with a low introductory annual percentage rate (APR) may help you save money on interest for those payments. These cards typically offer new users a very low interest rate for a set amount of time.

As long as you repay your balance before the introductory period ends, you may finance your purchase without high interest charges. However, any balance that remains on your account after the promotional period ends will accrue interest at the standard rate. A credit card may have a higher standard interest rate than a personal loan, so consider whether you have the means to make the most of the introductory period. You may have to make more than the monthly minimum payment throughout your promotional period to pay off your credit card balance in time.

You want more security

Credit cards may offer you more security than cash. Many credit cards come with features to protect you from fraud and theft. And if someone does get their hands on your credit card, you may have purchase protection. You’re never held responsible for unauthorized purchases on your Discover^® Card.³ In addition, your credit card issuer may monitor your card activity and flag suspicious transactions.

When should you not get a credit card?

While a credit card is often a helpful financial tool, a new card may not always make sense for you. Consider these reasons not to apply for a new credit card:

You spend more than you can afford

If you struggle to keep your spending in check, applying for a new card may be a significant risk. Overspending on a credit card may be easier than overspending on a debit card, because you’re not limited by the cash available in your bank account.

With more spending power, you may be tempted to splurge. But if you can’t pay down your balance, a shopping spree may leave you with more debt than you realize. The balance you carry into the next billing period accrues interest based on your card’s APR. As interest mounts, your credit card debt may quickly spiral out of control.

Carrying a big balance may also hurt your credit score. Your credit utilization ratio—the percentage of available credit you’re using at a given time—has a significant influence on your credit score. As your debt grows, your credit utilization ratio increases, which may bring your score down. And if you fall behind on credit card payments, your score might fall even further.

You should also consider whether you can afford credit card fees. For example, you may incur a late fee if you fail to make the minimum payment by the due date. Other common fees include a cash advance fee for using your credit card to withdraw cash and a balance transfer fee for moving a balance from one credit card to another.

Did you know?

While Discover has no annual fee on any of our cards, other credit card companies may charge an annual fee that costs more than your potential rewards.

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You're between jobs

If you’re not working, a credit card may seem like a convenient way to make ends meet. But applying for a credit card when you don’t have consistent income generally isn’t a good idea. Most credit card companies consider your income when reviewing your application, so you may not qualify for many credit card options without stable employment. Even if you do qualify for a card, you may still fall behind on payments without a regular paycheck.

You're applying for a home or auto loan

A new credit card application may hurt your chances of qualifying for a new mortgage or auto loan at the same time. When you apply for new credit, the lender typically uses a hard inquiry to access your credit file. Each hard inquiry is usually reported to a major credit bureau and may lower your score, especially if you have minimal credit history. Multiple hard credit checks in a short time frame may cause lenders to suspect you’re not financially stable enough to take on new debt.

The bottom line

A new credit card has many advantages: It may help you finance a big purchase, earn rewards, and build credit history. But you should understand the risks and only apply for a card when you’re ready. Consider your needs, resources, and habits to determine whether a new credit card could bring you closer to your financial goals.

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