If you are looking for a new credit card, now is the time to shop. Qualifying for a card is getting easier as banks relax underwriting standards after bracing for a wave of pandemic-related defaults that never came.
“Credit card offers nearly froze when the COVID crisis first hit, but they’ve been steadily opening up again,” says Gerri Detweiler, education director for Nav, which helps business owners manage credit.
About 29% of banks eased their underwriting standards for credit cards in the first quarter, while just 2% tightened them, according to a Federal Reserve survey. In addition, direct mail credit card offers have increased, according to the market research firm Competiscan. Solicitations rose 6% year over year in April, and the company expects volumes to grow even more significantly during the summer.
Here’s how to spot the good deals from the duds as banks pull out all the stops to get your credit card business.
[Read: Best Rewards Credit Cards.]
What Kind of Deals Can You Expect?
Card issuers are not only easing credit standards but also offering incentives in recent months to entice new customers. That means big point bonuses, enhanced rewards programs, interest-free balance transfers, and perks such as free personal training sessions and access to airport lounges.
Travel rewards credit cards have been particularly aggressive in courting customers as the pandemic in the U.S. ebbs and people start planning trips, says Megan Cipperly, senior director of insights at Competiscan.
“Issuers are looking to capitalize on the anticipated travel boom,” she says. “We’re seeing high sign-on incentive values to attract new cardholders for hotel and airline cards especially.”
Increased competition for business could also benefit financially responsible consumers who lack credit history, says Bruce McClary, senior vice president of communications at the National Foundation for Credit Counseling.
Relaxing the credit requirements needed to qualify for a card can “make it less challenging for more people to responsibly and affordably build their credit history,” he says.
Why You Might Want to Take That Credit Card Offer
Card shoppers have an edge, Detweiler says. Because issuers are hungry for business, consumers can use their leverage to find cards with the features and benefits they most need and want.
“This could be a great time to reevaluate the credit cards you hold and consider shopping for a new one,” Detweiler says.
You may have an easier time finding cards with balance transfer offers. A little more than half of mailed credit card offers in the first quarter of this year included a balance transfer deal, a jump from the previous two quarters, Competiscan reports.
A low-rate balance transfer offer can help you pay off your debt faster, but you’ll need to do this before the introductory rate ends, Detweiler says.
“Transfer an amount you can pay off during the length of the (offer), and set up automatic payments for the monthly payment,” she says.
Now is also a great time to reevaluate your credit card rewards, Detweiler adds. “If you’re not likely to fly as much in the coming year, for example, you may want to switch to a cash back rewards card,” she says.
Proceed With Caution: Offers to Avoid
Some consumers may be better off avoiding the temptation to apply for a new card, McClary says. If you have missed payments recently or face financial setbacks, taking on new credit can make a bad situation worse.
“The increased likelihood of credit approval should not always be considered a sign that it is the right time to open a new account,” McClary says.
If you are struggling financially, you will be better off getting debts under control with the help of a nonprofit credit counselor, he says.
Avoid applying for a card to get the perks or just because you can, says Mike Sullivan, personal financial consultant with Take Charge America, a national nonprofit credit counseling and debt management agency.
“Credit card companies would rather dangle special offers to consumers than actually provide better terms,” he says. “If the new card offer has a permanent APR that is as high, or higher than the card being replaced, it is almost always a bad deal.”
Another bad deal: certain types of balance transfer offers, Sullivan says. Avoid any balance transfer offer that charges more than 3% in transfer fees.
“Consumers need to look at the total cost of any balance transfer before committing,” he says.
[Read: Best 0% APR Credit Cards.]
Could Your Credit Limits Increase?
If you need a credit limit increase and your credit score is good, now might be the time to ask for it, Detweiler says. “You may even be able to request a credit line increase online and get an instant answer,” she says.
Competiscan notes a recent uptick in issuer campaigns promoting credit limit increases, which is a sign that issuers want people to use their plastic.
Remember that if you ask for an increase, this can result in a hard credit inquiry that temporarily hurts your credit score, Detweiler says. “Many times, though, issuers use a soft inquiry, which doesn’t affect your credit scores,” she adds.
More from U.S. News