Credit card advertisements are everywhere – in your mailbox, on TV, and of course on the Internet. Many people ignore such ads, but maybe it’s not such a bad idea to apply for another credit card. What is the advantage? Do you really need another account?
This all depends on how long you’ve had the other account, how much you currently owe on the balance, and what your objectives are. Some people establish their credit with a very basic account and miss out on a lot of great opportunities for perks, rewards and other membership benefits not available on lower-tier cards. Maybe applying for a more prestigious card would allow you benefits like:
A higher credit line: The cards you apply for with no credit are very different from the cards you apply for after proving yourself creditworthy. While basic cards are limited to a few hundred or thousand, executive cards go much higher.
Points that can be converted for bonuses: This could mean a free tank of gas or other gifts and households supplies. This is one of the best reasons to apply for a better card because beginner’s credit cards hardly ever provide member rewards.
Free travel insurance and temporary car insurance: And to think how much you stress over finding travel insurance and car insurance, when all along you were covered by your credit card company! Of course, no rental company is going to tell you this because they want more money. However, if you choose a top-tier card you may be surprised at how much you’re covered while on the road.
More Bonuses: Credit card applicants can also look forward to signup bonuses of cash credit and cash back up to 5%.
Investment opportunities: You may be able to have new investment opportunities by applying for better credit cards that offer direct investment options—sometimes even letting you use a portion of the credit you spend on investments.
Frequent flyer miles: And of course, what’s better than a free airplane ride? With frequent flyer models you can earn miles by simply making purchases using your card.
Even if you already have another card, you might find it advantageous to apply for another one, particularly if your credit limit is increasing. By qualifying for another account, you could actually improve your credit score based on the credit to debt ratio factor. For example, if you only have a few hundred dollars to spend because of a nearly maxed out credit card, it might actually help if you had an extra credit account that was available to you. The more credit you have the more of a difference it makes—provided you stay current with all of your accounts.
Another reason to apply for a second card is to refinance the debt you have already incurred. Pay close attention to the interest rate. The card you are currently paying on, or might pay on later if you make a purchase, may have high interest rates. If you can find a credit card that offers a lower interest rate, this could potentially mean saving hundreds of dollars in savings.
If you are self-employed or own your own business it is highly recommended that you separate your business financial account with your personal financial account, rather than lump them altogether. You can more easily track expenses when you have an account for personal transactions and for controllable and non-controllable expenses. If you actually put the account in your business’ name, then you could actually establish credibility as a business owner with your own line of credit. This can eventually help you apply for a small business loan with better rates than a typical credit card.
So the next time you see a credit card advertisement, don’t dismiss it right away. Maybe after you take a free airplane round trip, or get hundreds of dollars of free gas, or free gift cards you’ll start to see things differently.