3 questions to ask before signing up for a new credit card

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Register for a new credit card can have big benefits. But you don’t want to try to apply too many cards too quickly, as this could put your credit score at risk and potentially lead to a card issuer denying your application.

To make sure a card is worth buying, there are three key questions you need to ask yourself before applying. Here is what they are.

1. What do you have to spend to earn the sign-up bonus?

Many people choose to sign up for credit cards because they want to take advantage of the bonuses card issuers offer to new customers. These bonuses can be worth hundreds or even thousands of dollars. Depending on the card, they can take the form of cash back, miles or airline tickets, or free merchandise.

Before signing up for a card in hopes of winning the bonus, however, you will need to understand the requirements for obtaining it. You usually have to spend a certain amount, like $500 or $1,000 or more, to become eligible for bonus rewards. And you’ll usually have about three months to do it.

If you’re unlikely to meet the spending limit, you shouldn’t sign up for the card if you’re doing so in hopes of getting an incentive for new customers.

2. Do the rewards match your spending?

Earning credit card rewards can also be a good reason to sign up for a new credit card. This is because different cards offer their own specific programs that provide additional rewards for different types of spending. Some cards, for example, will offer 1% cash back on most purchases, but 3% or even 5% back on gas or races or travel.

If you’re interested in a credit card, take a look at what kind of spending you’d have to make to earn the bonus rewards. If the expenses are not your usual expenses, you might be better off using another card that suits you better.

3. Is the annual fee (if any) worth it?

Finally, you’ll want to check if the card you’re considering charges an annual fee. Some cards are free, but others charge a set amount each year to keep them open. This annual fee can sometimes reach several hundred dollars.

Annual fees may be worth payingso you don’t necessarily have to avoid a card just because it imposes that cost. But you’ll definitely want to make sure the fees are truly justified. Fees might be worth paying if the card offers valuable perks you’ll enjoy, such as free checked bags, or has a generous rewards program you can take advantage of. But you’ll want to look at the value of the benefits versus the fees to make sure it’s worth paying.

By asking yourself these three questions, you can ensure that the card you are looking for is really worth asking for.

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