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Having one — or several — credit cards can be a very useful financial tool for several reasons, including building or repairing credit, racking up rewards or providing protection when traveling.
Yet, experts agree that you should avoid having more credit cards than you can handle as the consequences might be detrimental. Also, if you plan on having multiple cards, be extremely disciplined using them.
In addition, with rates exploding recently, experts advise caution with both using them or getting new ones.
In fact, the average interest rate among credit card offers is 22.90% as of Dec. 2023, according to WalletHub. Meanwhile, the interest rates on existing credit card accounts are slightly lower, at a 22.77% average annual rate.
“Even if you’ve already got high levels of credit card debt, adding another card to your financial burden makes little sense,” said Loretta Kilday, spokesperson for DebtConsolidationCare.com.
Reasons You Shouldn’t, No. 1: Pay Your Debt First
Kilday recommends paying off your existing debts before opening a new credit card.
For example, if you plan on applying for a mortgage, keep in mind that new credit applications will trim fleetingly from the final score. She said this could change loan approvals or terms.
Reasons You Shouldn’t, No. 2: It Creates Temptation
One reason why you shouldn’t open a credit card in 2024 is that it creates a lot of temptation to spend money on wants rather than needs or emergencies — at least according to Sebastian Jania, owner of Ontario Property Buyers.
“For the average person, this creates too much of a threat to their financial health and so they would be better off not getting an additional credit card,” he said.
Reasons You Shouldn’t, No. 3: Record High Rates
Jania added: Another reason why you shouldn’t open a credit card in 2024 is that, at today’s higher interest rates, some credit cards are at the highest rates they’ve ever been. This results in extremely high costs for carrying any consumer debt. And, according to him, this high cost — for most people — is not worth the deal.
Reasons You Shouldn’t, No. 4: You Probably Already Have Too Many
Finally, Jania said that most people don’t need more than one or two credit cards — and getting additional ones is likely not a good idea.
“If one does need access to available capital they should focus more on something like a personal line of credit,” he said.
However, opening new credit card might be a good idea under certain circumstances.
Reasons You Should, No. 1: Added Perks
Credit cards come with a lot of perks, especially through welcome bonuses.
And if you have the discipline to use the credit card strategically, you could generate thousands of dollars of cash back throughout the year, said Jania.
Reasons You Should, No. 2: Balance Transfers
A second reason why you should open a credit card in 2024 is that there are lots of balance transfer offers available. If you have lots of high-interest debt elsewhere, it may actually be an opportunity to move that debt to the new credit card at a very low rate — or even at 0%, added Jania.
“This can be an incredibly effective tool for managing one’s finances and getting one out of a financial rut,” he said.
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