Credit card companies release tempting offers on a regular basis. With so many attractive sign-up bonuses, it might seem hard to resist applying for them all. However, bank application rules and the impact on your credit score mean there are limits on how many cards you can apply to at once. So, how often should you apply for a credit card?
In this article, learn when to apply, what impact it makes on your credit score, and some reasons to hold off. You can also find out the application rules for the largest credit card issuers.
[Read: Best Rewards Credit Cards.]
How Applying for a Credit Card Affects Your Credit Score
When you apply for a new credit card, it can affect your credit score in multiple ways. Here’s what happens to your credit report and score:
— Credit utilization. When you open a new credit card, your total credit limit increases. Assuming everything else stays the same, your credit utilization ratio will go down, and your credit score will increase. Credit utilization is expressed as a percentage and compares the amount of debt you owe with the amount of credit extended to you. For example, if you have a credit limit of $10,000 and owe $5,000, your credit utilization is 50%. By opening up a new credit card with a $10,000 limit, you’d have $20,000 in total credit, which drops your utilization to 25%. Experts recommend keeping your credit utilization below 30%.
— New credit inquiry. As part of applying for a credit card, the issuer will do a hard credit check. Every time there’s a hard inquiry, your credit score drops by up to five points. Hard inquiries stay on your credit report for up to two years, but they only impact your score for 12 months. Applying for too many credit cards in a short period of time can amplify the impact on your credit score.
— Average age of accounts. Opening a new account will reduce the average age of your accounts. The impact depends on how many other accounts you have open and how old they are. For people with established credit, the negative impact is minimal.
— Credit mix. Lenders want borrowers to have a mix of credit to show they can handle different types of payments. The impact of opening a new card on this scoring factor depends on your current mix of credit.
Your payment history is not affected by opening a new card. However, if you don’t handle this new account responsibly and make all of your payments on time, your payment history could be negatively affected. Sign up for automatic payment of the minimum amount due to ensure that you never miss a payment.
How Often Should You Apply for a Credit Card?
There’s a difference between wondering “how often can I apply for a credit card?” vs. “how often should I apply for a credit card?” Issuer application rules generally dictate how often you are eligible to apply for a new credit card.
In general, you should apply as often as you like so long as you can meet the minimum spend requirements, your credit score stays at an acceptable level, and banks allow you to open an account. A conservative approach is to wait about six months between credit card applications.
Bethany Walsh, the founder of BougieMiles.com, says, “If you have a long-established credit history, you’re OK to apply for cards more frequently because a large number of hard inquiries and new accounts will have less of an impact on your scores.”
If you have a lower credit score and are working on rebuilding your credit, limit your applications to one a year so the impact on your score is minimal.
Why You Should Wait Before Applying
Although credit card offers can be tempting, there are numerous reasons why it is better to wait.
— If you’re buying or refinancing a home. Applying for a new card can complicate your mortgage application and result in a higher interest rate, worse terms or being declined. A $500 welcome bonus is wonderful, but not if it means paying thousands of dollars more on your mortgage over the next 30 years.
— If you’re rebuilding your credit score. Credit card offers will always be there. Focus on rebuilding your score now so that you can pick and choose which offers you want when your score is higher.
— If the welcome offer is too low. Welcome bonuses tend to fluctuate throughout the year. Before applying for a credit card, search card blogs to see what the highest offer has been. If the current offer is much lower, consider holding off.
— If you’re maximizing benefits. Some credit card benefits are based on the calendar year. Holding off to apply until the beginning of the year allows you to maximize the benefits. For example, the Chase Southwest welcome bonus counts toward the Companion Pass. Many people hold off on applying until January to get close to two years of this lucrative benefit.
Walsh warns, “If you’re planning on applying for a loan, you should hold off on applying for new credit cards. You never want to take a chance that the loan originator will deem new accounts as a sign that you’re financially unstable.”
How Many Credit Cards Can You Apply for at One Time?
The number of credit cards you can apply for at once varies by the card issuer. Each bank has its own rules. In some cases, these rules are shared publicly, while others have been crowdsourced by the credit card churning community.
Lisa Kulpa, the co-founder of BasicTravelCouple.com, says, “You can technically apply for as many as you want. However, you won’t get approved for them all. It pays to be strategic about your applications.”
Here’s how the application restrictions break down by card issuer:
American Express has several rules that affect your ability to get approved for a new card and qualify for a welcome offer. The good thing is that AmEx implemented a pop-up window during the application process that lets you know whether or not you’re eligible to receive a welcome offer for the selected card so you can cancel before completing the application.
— Once-per-lifetime rule. Unless you find a link with no lifetime language, you are not eligible to receive a welcome offer on a credit card if you’ve earned that offer previously. While this rule says “lifetime,” the reality is that many people qualify again after seven years.
— Five-card rule. Customers are limited to five combined personal and business credit cards at a time. Charge cards, like the Platinum Card from American Express, are excluded from this limit.
— One-in-five rule. American Express limits approvals to one every five days. However, you can apply for a credit card and a charge card on the same day.
— Two-in-90 rule. You may be approved for a maximum of two cards every 90 days.
Bank of America
Bank of America’s rule, known as the 2-3-4 Rule, is simple. This rule limits you to two new cards within 30 days, three new cards within 12 months, and four new cards within 24 months.
Capital One has several rules to understand when applying for a new credit card.
— Maximum number of cards. Capital One limits customers to two of its personal cards at a time. Co-branded cards and small-business cards are generally excluded from this cap.
— Once per six months. Customers may not get approved for more than one new card every six months. This limit includes both personal and small-business cards combined.
— Welcome bonuses. Some applications have language that prevents existing or previous cardholders from receiving the bonus again.
Chase’s application restrictions are probably the most well-known among people who churn credit cards. They’re also some of the most restrictive rules on this list because they count activity at other banks as well.
— Chase 5/24 Rule. The Chase 5/24 Rule says that you’ll be declined for a new card if you’ve opened five or more new cards from any issuer in the last 24 months. Being added as an authorized user generally counts toward this total, but you may have luck appealing your application denial. Additionally, small-business cards that report to personal credit bureaus also count.
— 90-day application limit. You cannot apply for more than one personal and one business card within 90 days.
— Welcome bonus rules. Most Chase cards restrict you from earning a bonus if you’ve received a bonus from the same card in the last 24 months. This rule sometimes applies to families of cards, like the Southwest cards. Additionally, the Sapphire Preferred and Sapphire Reserve cards have a 48-month wait if you’ve received the bonus from either card or have either card open.
Citi has a few rules that cover the timing of your applications and eligibility to receive a bonus.
— Timing of applications. You can apply for a maximum of one personal or business card every eight days. On top of that, there’s a limit of two new cards in 65 days. Additionally, you can only receive one business credit card every 90 days.
— Welcome bonus 24-month rules. Citi limits receiving a welcome bonus from families of cards to once every 24 months. Cards that earn ThankYou Points, like the Citi Premier Card, would be in one family. The twist is that the clock resets if you’ve closed a card in that family in the past 24 months. If you’re thinking of closing a related card, hold off until you’ve applied for the new card.
— Welcome bonus 48-month rules. Some families of cards have even stricter application rules. The American Airlines credit cards have a 48-month waiting period from the date that you previously received a bonus.
Discover limits customers to a total of two Discover cards. Additionally, you may only have one student Discover card at a time. Discover also limits cardholders to a maximum of one new card per year.
U.S. Bank does not have any specific application rules for the majority of its cards. However, you must be an existing U.S. Bank customer if you want to apply for the Altitude Reserve Visa Infinite Card. If you’re not already a customer, open a deposit account before applying.
While Wells Fargo does not have specific application rules regarding the number of cards you may have open, it does have generic language stating that it can limit the total number of open Wells Fargo cards you have.
— Welcome offers. You may not be eligible for a welcome bonus, intro annual percentage rate offers and other promotions if you’ve opened a new card in the last 15 months. This restriction applies even if the account is closed and has a zero balance.
— New card restrictions. You may not open a new Wells Fargo card if you’ve opened a card in the last six months.
The Bottom Line
How often should you apply for a credit card? The answer is that it depends.
Everyone’s credit history is different, so the impact to your credit score won’t be the same as someone else’s. Issuer application rules limit who can apply and how many cards they’re eligible for. And, as attractive as some card offers are, there are outside reasons why you should hold off on applying. Make sure that the offer is worth it, that you can meet the minimum spend requirement, and that it won’t impact bigger financial goals, like a new mortgage.
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