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Secondary credit cards can help consumers improve their credit, increase purchasing power and leverage spending for lucrative rewards. But second cards also add more financial responsibility and risk. Before signing up, do your research to make sure you’ve picked a card that will benefit you and have a plan to properly manage the account towards whatever your goal may be.
Do I need to get a second credit card?
Your personal and financial circumstances determine whether a second card is right for you. You may want a second card to improve your credit score, increase your overall reward potential, or leverage additional purchasing power.
A second credit card offers the opportunity to boost your credit score by increasing your credit utilization ratio. If your current card limit is $2,000 and you spend about $1,000 on the card each month, your credit utilization ratio will be about 50%. But if you get approval for a second card and now have two cards with a $2,000 limit, but still only spend $1,000 on one or both cards, you’ll have a 25% credit utilization ratio—some below the recommended credit utilization cap of 30. %. This can help improve your credit score and overall credit profile.
If the card you are currently using offers category-based bonus rewards for grocery and restaurant purchases, but you also want to receive gas bonus rewards, a second gas bonus rewards card can help you earn more rewards overall. Using different cards for different rewards can be tricky to keep track of, so only follow an option like this if you’re ready to stay organized.
Extra purchasing power can be a tempting reason to apply for a second card, but unless you’re willing to manage extra debt carefully, it can also come with significant risk. As we’ve all learned from Voltaire – or perhaps Spiderman’s Uncle Ben – with great honor comes great responsibility. We don’t recommend looking for a second credit card to increase your purchasing power unless you also have a secure way to make sure your higher expenses are offset by paying more bills.
You may also feel like you’re ready for a second credit card if you’ve outgrown your first credit card. For example, you have a student credit card with a low reward potential. Now you have graduated from university and you are ready to start earning better rewards. Or maybe you have a secured card with a low credit limit. An unsecured card with a higher limit or better rewards may be a better fit for your needs.
When to get a second credit card?
Credit scores and raises can provide opportunities to apply for a second credit card, but these aren’t the only times you’ll consider applying for a second credit card.
Increase credit score
If your credit score has increased recently, it might be a good time to apply for a new credit card. If you have a higher credit score, you qualify for better cards with better rewards, higher credit limits and more attractive benefits.
Getting a raise
Your debt-to-income ratio can influence a card issuer’s decision. Less debt and more income can qualify you for a higher credit line. When you receive a raise or see your income increase, it may be in your best interest to contact or update your card issuer. Higher income can also help improve the overall picture a potential lender sees when you apply for additional cards or lines of credit.
Big life change
Maybe you have moved to a new city, have a new job, started a new business or are planning to travel more often. A new credit card with a higher spending limit can help you cover additional expenses and can give you more bang for your buck with rewards.
If you have recently taken out a car loan or mortgage, you should double check your credit before applying for a new credit card. Taking out loans can temporarily lower your credit score.
For those starting a new business, business credit cards often require personal guarantees, but offer better options for separating your business and personal expenses.
Financing a major purchase
Low introductory purchase rates can help consumers finance large purchases without paying interest over a predetermined period of time known as a low introductory APR period. Cards with low introductory APRs for purchases are best used in conjunction with a plan to pay off qualifying balances before the end of the low introductory APR period, as a normal APR applies at the end of the promotion and can quickly drive up the cost of the original purchase significantly.
Six months since your first credit card
Cardholders generally have to wait about six months between credit card applications. Applying for too many in a small time frame can lead to a drop in your credit score and can negatively impact your creditworthiness as perceived by potential lenders.
Double check how long it has been since you opened your first credit card. If it’s been more than six months, it should probably be safe to request a second one.
If it seems like you need a large balance and you want more time to pay off your card debt, you can use a balance transfer to move your debt to another credit card. Cards with low or 0% introductory APRs on balance transfers can buy you more time to pay off a large balance you expect to have without immediately causing high interest rates.
Balance transfer cards are not a permanent solution to chronic credit card debt. Introductory APRs on balance transfers are followed by regular card APRs – a balance transfer to a low introductory APR card is a temporary solution and should be done with a plan to clear the debt before the end of the low introductory APR period to pay off, or not possible at all.
Choosing the best second credit card
Do you long for more cash back for money you spent on gas or groceries? Are you preparing for a new style of travel and can you benefit from earning points or miles for every dollar spent? Do you want a hotel discount? Travel advantage? An introductory APR on balance transfers or purchases? Here are some of our top recommendations.
- For money back: The Chase Freedom Flex℠ card offers a great option for an affordable cash back credit card. With a $0 annual fee, cardholders can earn 5% cash back on up to $1,500 in quarterly rotating categories (activation required), 5% on travel purchased through Chase Ultimate Rewards®, 3% on restaurants and drug stores, and 1% on all other shopping.
- For travel rewards: The Capital One Venture Rewards credit card offers benefits and rewards that are best taken advantage of by frequent travelers in mind. While the annual fee can be high at $95 for some, the reward potential can quickly outweigh the cost of the card.
- For 0% Introductory APR: While the Wells Fargo Reflect® Card (Fees and Fees) offers a 0% intro APR for 18 months from account opening for purchases and qualifying balance transfers. An intro APR extension of up to 3 months with minimum payments on time during the intro and renewal periods is available. After that, a variable APR of 15.24% to 27.24% applies. Balance transfers made within 120 days are eligible for the 3% introductory rate and fee, thereafter a balance transfer fee of up to 5%, minus $5 will apply. Its peer, the Wells Fargo Active Cash® card (fees and fees), offers an intro APR of 0% for 15 months from account opening for purchases and qualifying balance transfers, after which a variable APR of 17.24%, 22 .24% or 27.24% applies. Balance transfers made within 120 days are eligible for the introductory rate and fee of 3%, after that, a fee of up to 5%, with a minimum of $5, remains useful with its reward potential: the Active Cash earns 2% cash rewards on purchases.
What to do before applying for a second credit card?
Before you fill out a formal credit card application, make sure you’re applying for a card that’s best for you. Most credit card applications leave a hard question on your credit report, which can temporarily lower your score.
Compare credit cards
Compare credit cards from not just the same card issuer, but from different financial institutions. Determine what type of rewards or card you need (cashback, points, miles) and then narrow your search to the specific types of rewards you want to earn.
Check for pre-approval
Some card issuers offer online pre-approval tools. This is a good way to see which cards you qualify for without submitting a formal application that requires a hard credit draw.
Read the terms and conditions
You want to pay attention to interest rates, any costs and payment terms. Don’t forget to analyze any restrictions on earning or redeeming rewards and perks you want to use.
Consider the full package
Will any promotional APRs also benefit you? If you are not offered an annual compensation the first year, can you pay the compensation every year after that? Can you pay the full balance each month to avoid interest?
After you have a good idea of what you want and what you qualify for, choose one card to apply for. You may receive an immediate response or you may have to wait a few days or weeks for a final decision.
Will getting a second credit card help my credit?
Getting a second credit card can improve your credit score. However, it is essential that you manage your expenses and pay on time each month or else your score could be damaged.
Remember that your credit utilization rate is a major factor affecting your credit score. Opening new credit accounts increases your total available credit, which in turn can lower your credit usage and thus improve your credit score. Experts recommend keeping your total credit utilization below 30% to show lenders that you are able to manage your spending well.
You can keep your credit usage below 30% by spending responsibly and making multiple payments throughout the month, but a second credit card can help increase your total available credit.
Whether you apply for a second credit card depends largely on you and your lifestyle. Aim high, but don’t request a second card that you can’t afford or manage. A second credit card is not a solution to existing credit card debt – maximizing credit cards will result in a low credit score and a negative impression on future lenders. If you’re in the position where you’re ready, a second credit card can be a great option to unlock more rewards or benefits and improve your credit when used responsibly.