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Should I apply for a credit card even if I don’t need one now?

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Logan Fincher/Bankrate
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There are many reasons to consider getting a credit card, even if you don’t need to borrow money. A credit card can help you build or rebuild your credit history, establish strong financial habits and finance a large purchase. Additionally, credit cards come with additional perks, such as the opportunity to earn cash back, points and miles, among other lucrative rewards.

But on the flip side, there are also downsides to having a credit card, such as the temptation to overspend and end up with a load of debt.

Ultimately, the decision of whether or not to get a credit card depends on your individual financial situation. You may have a few credit cards in your wallet already, or you may be new to the credit card landscape. Whichever scenario fits your portfolio best, let’s take a look at when it may make sense to get a credit card and when it doesn’t make sense to get a credit card.

When to get a credit card

So, should you get a credit card even if you don’t need one? In short, it depends.

It depends on many things, including your current debt levels, how much income you earn and how much credit you currently have available. That said, you should never apply for a card you don’t want just to earn credit card rewards. If you don’t have a solid reason to apply for a credit card, it probably isn’t a good idea to apply for one.

If you’re looking to build credit, a credit card may be the right next step in your credit journey. But if you’re still deciding whether you should apply for a credit card right now, here are five reasons to consider:

Your credit could use a boost

If your credit isn’t in the best place, you’ll likely benefit from a credit card. Applying for a credit card can help you build a positive credit history by demonstrating that you’re willing to borrow money responsibly. Since credit card applications are considered a hard inquiry, it may temporarily lower your credit score, but your score will likely increase after you prove your creditworthiness.

If you’re making regular credit card payments on time and you are managing your credit utilization, your credit score can only benefit from having a credit card in your wallet.

You need help building credit from scratch

Credit cards are a great way to help someone with no credit history build a positive credit history. While there are a few ways to build up a positive credit history, a credit card is one of the easiest and quickest ways to do so. While it may sound counterintuitive considering so many credit cards require good or even excellent credit scores to apply, there are a handful of credit cards available that cater to individuals with no credit score. Here are our picks for the best credit cards for no credit history.

You want to diversify your credit

Having multiple kinds of credit on your report can help boost your credit score and help lenders see you as a responsible borrower. As a matter of fact, credit mix accounts for 10 percent of your FICO score. While that may not seem significant on the surface, multiple lines of credit can help lenders see you as someone who can manage their debts over time.

You want to finance a large purchase

Zero percent APR periods let you avoid paying interest on purchases for a limited period of time. Some credit cards offer 0 percent APR for 12 months, while others may offer up to 21 months. Zero-interest credit cards make it easier to fund a large purchase or an unexpected medical expense with no interest added to your balance.

However, the key to ensuring a 0 percent APR period works in your favor is by paying your balance off before the period ends. By doing so, you’ll never have to pay any interest. Here are our picks for the best 0 percent interest credit cards.

You want to earn rewards

Rewards credit cards offer lucrative perks in the form of cash back, miles or points on everyday purchases. However, using a credit card to earn rewards is not always worth the risk. First of all, if you are considering a rewards credit card and you don’t have an established credit history, you may not be approved for one.

The best rewards credit cards may require you to have good or excellent credit. Using a credit card to build up rewards is only ever a good idea if you pay your balance in full each month. If you can’t manage your balance, the rewards you may be earning won’t outweigh the interest accruing on your balance.

When not to get a credit card

Many people avoid applying for credit cards altogether because they don’t have a good credit score — or no credit score at all. This is shortsighted, however, because credit cards can help you build a better credit score, even if you are being told you aren’t ready for one.

However, while credit cards work for some consumers, they are not always the best option. Let’s consider a few instances where a credit card simply is not a good option:

You spend beyond your means

While credit cards offer a handful of benefits, they also provide a risk for individuals who spend more than they can actually afford. It is far too easy to fall into credit card debt simply by letting your balance get out of control. If you can manage to treat a credit card like you would cash, you’ll be on the right track.

Payment history accounts for 35 percent of your FICO credit score, making it the most important factor when it comes to calculating your credit score. If you miss consecutive payments, you are not only racking up a significant amount in interest charges, but you are hurting your credit.

You have outstanding debts on existing credit cards

If you can’t handle an outstanding balance on an existing line of credit, it probably isn’t the best idea to add to the mix. Credit cards are not a bandaid that can help an existing problem go away.

However, if you are struggling to take care of a balance on a credit card you already have, consider a balance transfer. This is the only scenario where getting another credit card makes sense because you are transferring a balance from one account to another. More times than not, balance transfer credit cards offer cardholders an introductory 0 percent APR for a limited time (usually 12 to 21 months).

Keep in mind that balance transfers require a fee (typically between 3 percent and 5 percent), but with the right card, you can save a significant amount of money on interest while getting your debt under control.

You were recently denied a credit card

Every time you apply for a new credit card, the lender conducts a credit inquiry — or a hard inquiry — on your credit report. A credit check will temporarily affect your credit score, usually only by a few points. However, if you are consistently applying for new lines of credit, your credit score will take a more significant hit. Lenders see this as a red flag because too many credit inquiries may mean you are taking on debt you can’t pay back. If you were recently denied a credit card or applied for more than one, take a step back and consider working on your credit score before applying again.

The bottom line

Credit cards offer many benefits, including rewards programs and the ability to build credit. However, credit cards can also encourage debt if you’re not careful. There are a handful of alternatives to consider if a credit card doesn’t feel right, but take the time to consider your spending habits before deciding if a credit card is right for you. As long as you prioritize strong financial habits and treat your credit card like you would your debit card, you’ll be just fine.

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Part of  Guide to finding your first credit card