7 Times You Shouldn't Apply for a Credit Card

Credit cards offers get better and every year. With longer introductory rates and more generous sign up bonuses, you may be tempted to apply for every great credit card you see. However, there are times that applying for a credit card isn’t in your best interest. 

1. When you don’t have a steady source of income. Credit card issuers are required to ask for your monthly income before approving you for a credit card. But, if you know you don’t have a reliable source of income you can depend on to make your monthly credit card payment, applying for a credit card would be a mistake. Without money to make your payments you risk missing payments and hurting your credit. 

2. When you’re in college.

More college graduates are starting their adulthood with thousands of dollars in credit card debt. Juggling a credit card with the rest of your college responsibilities and the lack of a reliable income can lead to credit problems that affect you after you graduate. Starting out in the real world with credit card debt means you’ll have less of your income to put towards your monthly living expenses. And if you have student loans, those payments will start a few months after you graduate leaving you with even less money.

3. When all your other cards are maxed out.

With high balances on all your other credit cards, the last thing you need is an additional credit card payment. Opening another credit card in that situation will only put you further into debt and make it more difficult to manage your credit card balances. Some credit card issuers may even deny your application if you have too much credit card debt.

4. When your credit score drops.

Your credit score is a major factor in your credit card approval. It also plays a role in the terms you receive when you are approved. A lower credit score decreases your chances of getting approved. And, if you are approved despite a lower credit score, you may have a higher interest rate than if you waited until your credit score improved. A higher interest rate means a higher cost of carrying a balance on your credit card.

5. When a salesperson pressures you.

You can hardly shop these days without being urged to apply for a store credit card. While saving 5 to 10 percent on your total sounds tempting, a store credit card may not be worth it. Plus, the few minutes you’re at the register isn’t enough time to read through the credit card terms (if you’re offered them at all) to decide whether the card is a good deal (it’s probably not). 

6. When you’re having trouble making ends meet.

You might think that getting a credit card will relieve some of the financial pressure you're facing - and it may in the short term. However, eventually that credit card will just be another burden on top of all your other financial troubles. Seek other methods for improving your finances before applying for a credit card.

7. When you’re preparing for a mortgage or auto loan.

Having your credit in the best shape possible when you apply for a major loan like a home or auto loan improves your chances of getting approved at a good cost. Opening a new credit card in the months before your application can hurt your credit score and make it harder to get approved. Not only that, taking on additional financial obligations can make it more difficult to afford monthly loan payments. Delay your credit card applications until after your loan application has been approved.