How Often Should I Apply for New Credit?
Credit cards don’t go out-of-date, but you could be missing out on new features.
I haven’t applied for a new credit card in about ten years and my daughter thinks I’m crazy. I have two cards that I use – one with low interest for buying big stuff and the other to rack up airline miles.
But according to my daughter, my credit cards “suck.” She thinks that I need to apply for new cards because they have new features and new rewards that my old cards can’t possibly have. Is that true or is she just buying into advertising? How often should you apply for new credit cards?
I have to say, the counsellors and I are really impressed – we usually have to convince people not to apply for credit cards. So having a conversation about not applying for cards frequently enough is rare for us, but it’s definitely a question we can give you some clarity on.
Credit cards don’t come with an expiration date. By and large, there is not much reason that you should have to get new cards because your cards are “too old” – particularly in the case of the low-interest card that you have. The rewards card may be a little different, but we’ll discuss that below.
As for credit cards in general though, having an account that’s been in good standing for so long without any issues or hiccups is actually a good thing. This would be a positive thing to show on your credit profile, and would contribute to you building a good credit score.
In fact, closing that old account and having it removed from your credit report could actually damage your credit. That’s because length of credit use is one of the 5 key factors in your credit score calculation. So really, it’s in your best interest to have at least one older card that you maintain in good standing.
Another thing to consider – particularly on the low-interest credit card – is that there are very few features that creditors would add to their services that they wouldn’t extend to existing customers. So even with your old cards, you’d be able to track your account and manage it online. If the creditor offers online credit score tracking, they’ve probably extended that service to you.
I’d recommend looking at the website for your creditor and seeing what kinds of features and services they offer on new credit cards. If you see something that you don’t have, call the creditor and ask if that’s something they can add to your account.
If you’ve been such a loyal customer with an account in good standing, they’re probably going to offer whatever they can to keep you around so you won’t go somewhere else. There’s nothing to lose to call your creditor and ask. If you can negotiate to enhance your existing account, that would be in your best interest.
Now, that being said, the rewards credit card may be a different matter. New rewards credit cards and reward feature sets have been created in the past ten years – and you usually can’t apply new rewards packages to a different rewards credit card.
So in this case if you’re using the card just to generate rewards strategically, then you may want to explore the new cards available to see if there’s something better than what you have. Take your time, research your options and only apply for a new credit card if it has everything that you want and things you can’t get with your existing cards. Also keep in mind that most rewards cards charge an annual fee. Be sure you will make up for that fee with the benefits you receive from using the card.
I’d also recommend before you apply, take time to review your credit reports to see what they say. Even if you’ve been responsible and haven’t had any missed payments or problems, there’s a chance there could be something hiding in your credit report (including mistakes and errors) that would decrease your credit score.
If you find anything wrong, go through the credit repair process to correct those mistakes before you apply. This will help maximize your score so you can get the best interest rate and terms possible.
Best of luck,
Jeffrey Schwartz is the Executive Director of Consolidated Credit Counseling Services of Canada and President of the Credit Association of Greater Toronto (CAGT).
If you have a question about a debt management program or just about finance in general, Jeff is here to help. Send us an email with your question to AskJeff@ConsolidatedCredit.ca. You’ll get the expert advice you need and your question may be featured here on our website.