5 Key Factors to Consider Before Applying for Your Next Credit Card

In the realm of travel rewards, it often feels like the perfect moment to apply for a new credit card.

However, before you press "submit" on that upcoming credit card application, take a moment to assess a few important factors to determine if this is truly the right time for you—and whether the card you’re considering fits your needs.

Here are five questions you should consider before you hit the submit button on your application.

Is the credit card associated with a loyalty program you know and plan to use?

You wouldn’t want to chase an enticing bonus offer for the Timbuktu Airlines rewards card (not a real airline, of course) if you have no intention of visiting Timbuktu and there aren’t any partner redemptions available for you to use.

For instance, I seldom fly with Delta Air Lines, so I haven't felt it was the right moment to apply for a Delta credit card from American Express. Given that Amex limits the number of credit cards one can hold, I’ve chosen other cards that better suit my needs, reserving my slots for those. This doesn’t mean I won’t consider a Delta card in the future—just that the timing hasn’t been ideal, even when the offers are appealing.

Being familiar with the program also means understanding whether the points or miles you earn will expire—and if they do, when exactly?

You should have a plan for utilizing the points or miles you've earned if they have an expiration date. Alternatively, you'll need a strategy to keep your loyalty program account active, particularly if you decide to cancel the credit card after a while or if you aren't using it regularly beyond the initial welcome bonus.

For instance, Wyndham Rewards points are set to expire four years after they're earned, even with new activity. If there’s no new activity, your points will expire after 18 months. Although Wyndham offers a selection of credit cards with bonus offers up to 45,000 points after meeting minimum spending criteria to help keep your account active, it’s wise to have pinpointed some potential redemptions and planned how many nights you can actually redeem using that welcome bonus in the next couple of years.

What are the spending requirements, and can you meet them?

To qualify for the welcome bonus, most banks ask that you spend a specific amount within a designated timeframe. This is referred to as the minimum spend requirement. These requirements can vary widely, from a few hundred dollars to tens of thousands.

Before you apply, determine how much you need to spend to earn the bonus and ensure you can achieve that within the required timeframe. If you’re uncertain about spending $5,000 in 90 days, you might want to consider a different card that has a lower spending requirement or a longer period to meet the threshold.

I prefer to apply for new credit cards when I anticipate significant expenses coming up, such as paying my homeowners or car insurance premiums in full, scheduling car maintenance, or embarking on home improvement projects or repairs.

The Business Platinum Card® from American Express is particularly appealing due to its welcome offer, which allows new cardholders to earn 150,000 Membership Rewards points after spending $20,000 on eligible purchases within the first three months of membership. This card also has a $695 annual fee (see rates and fees).

At first glance, $20,000 might seem like a daunting figure, but it translates to about $6,667 per month, which is likely manageable for many small business owners. To determine if I could meet the spending requirements, I would assess whether I could reasonably spend that amount on the card within the given timeframe.

What are the bank’s application policies?

It's well-known that banks have become aware of individuals who apply for credit cards solely to earn bonuses and then close the accounts shortly after. As a result, many institutions have established rules or procedures regarding new applications.

Amex's once-per-lifetime rule regarding bonuses, Chase's 5/24 rule, and Bank of America's 24-month restriction are some of the most recognized application policies. However, other banks may hesitate to approve new credit if you've opened too many accounts in the last six to twelve months. These rules can change frequently, so it's essential to read the fine print on the application to avoid the disappointment of being denied a card or, worse, receiving the card but missing out on the bonus.

Before submitting your application, review your credit report to check how many cards you've opened in the last 6, 12, and 24 months. Have you opened more than five personal cards in 24 months? If so, you won't be eligible for a new Chase card.

If you're considering an American Express card, verify your history to ensure you haven't held that card before. If you have, you might still get approved, but you won’t qualify for the welcome offer due to the once-per-lifetime rule.

What is your current credit score?

I use Credit Karma to check my scores before applying for a new card. While this isn't my actual FICO score since Credit Karma uses VantageScore, it's close enough for my needs. Many banks and credit card issuers also provide credit scores as a complimentary feature.

Ensure your credit score meets the requirements for the card you're considering, particularly if it's a premium option like the Chase Sapphire Reserve® or The Platinum Card® from American Express. Here's an overview of the credit scores needed for approval on some Amex cards and the ever-popular Chase Sapphire Preferred® Card.

To give your credit score a quick lift, pay off your balances before the statement closing date to prevent them from being reported to the credit bureaus. This action will improve your debt-to-credit ratio. If you have older inquiries that might fall off your report soon, it may be best to wait for them to disappear for a potential score boost.

How does this welcome bonus compare?

Welcome bonuses can vary, being either cyclical or available for a limited time.

It's wise to investigate the historical offers for the card you're interested in through some online research. Reviewing this history can help you assess how the current bonus stacks up against previous offers for that card or similar credit cards.

If the card you’re eyeing is currently offering a 30,000-mile bonus, but just a few months ago it had a 60,000-mile offer, it might be wise to hold off and see if the bonus improves again. Nowadays, banks often do not honor better offers that emerge after your application, so aim to apply for the highest bonus available.

We’ve put together a useful guide on the best times to apply for these sought-after travel credit cards, drawing from the history of their offers. If you're looking for straightforward advice, you'll likely find it there.

In summary

Taking a little time to plan before your next credit card application can significantly improve your chances of getting approved. Plus, it ensures you can meet the minimum spending requirements and effectively redeem your points.