10 signs it’s time to add to your credit portfolio

Written by
Erica Sandberg
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If you’re like most adults in America, you have at least one credit card. A 2021 Federal Reserve report found that 83% of American adults do. You may want to add another card to your wallet, though, especially if all you have is your first credit card. Every credit card has unique features and not every account will suit every applicant or activity, so this decision should be based on qualification and need.

Here's how to tell if it’s time to add a new credit card to your plastic portfolio. 

You’re not earning rewards

Starter credit cards tend to be pretty basic. If that’s all you have and you used this card to develop a positive credit rating, you may now be eligible for a credit card that enables you to earn cash, points, or miles on your purchases.

Or perhaps you already have a rewards credit card but your spending habits have changed. Maybe you used to travel all the time, but now you find that most of your budget goes towards eating out. It may be time to add a dining rewards credit card to your wallet.

Review the wide array of rewards cards from different issuers, but you could also apply for a credit card with the same bank. Since you’ve already proven that you can manage one of their credit cards responsibly, that bank may be happy to issue you an upgraded account. 

You don’t have enough borrowing power

If you often charge up to your credit limit (or the limit isn’t high enough for everything you need to buy) and you pay off your balances quickly, you could probably use another credit card. This would allow you to split your transactions among your cards. This way you won't be left without the ability to purchase what you need, and can protect your credit utilization ratio which, behind payment history, is the second most important credit scoring factor. 

You can't use your card everywhere

Many new borrowers launch their credit history with a store credit card because qualification standards tend to be forgiving. The problem is, you may want to shop in places other than that retailer's line of stores. In that case, consider applying for a cash-back credit card that you can use anywhere, including your favorite retail store, and earn rewards everywhere you shop. If you’re worried about your approval odds, start with a secured credit card to help build your credit score.

>>MORE: Are retail credit cards worth it?

If you frequently travel abroad you may also find yourself limited with your current credit card. American Express and Discover aren’t as widely accepted worldwide, for example, (though this is improving) and foreign transaction fees can add up quickly if you regularly make purchases in a foreign currency. If you’re an international jet-setter, you may want to consider a no-foreign-transaction credit card to help save you money.

Your current credit card costs too much

Check your credit score. If it’s in good shape, you may qualify for a new credit card that has better terms than what you have now. Review the credit cards that fit your credit profile and that may offer better APRs. If you know that you want to pay off a debt in installments, using an account with the lowest interest rate will minimize the amount you pay in finance fees. 

>>MORE: Low APR or rewards: Which is better?

Similarly, if you have a credit card that charges an annual fee but aren't using the card enough to offset the cost, you might want to consider another option. Annual fee credit cards tend to offer the best rewards and perks so they are great cards to have in your wallet, but only if you're utilizing the card's perks enough to justify paying an annual fee. 

You’ve graduated from secured to unsecured

Congratulations! You used your secured card so well you now qualify for an unsecured credit card. If your original account did not convert the secured card into an unsecured card, now is the time to look for one that doesn’t require collateral. Because secured credit cards tend to have small credit lines, another card should expand your overall credit line and access to credit card rewards and perks.

You’re starting a business

Although it's possible to use a personal card for your enterprise, it probably won’t do everything you want. In addition to keeping your personal and business expenses separate, small business credit cards have special benefits and perks such as high lines of credit, discounts on common business purchases, quarterly and year-end summaries to assist with accounting, and cards that you can distribute to your employees.

You have a major purchase coming up

If you will be spending a significant sum soon and you have the cash to pay for it, you may consider opening a new credit card that has a generous welcome offer. Depending on the card, you can earn a large amount of rewards after charging a certain amount within a set timeframe of opening the account. As long as you delete the balance in full by the due date, you will turn a profit. Just make sure the account is right for future purchases as well.

If you need extra time to pay off an upcoming purchase, consider a credit card with an intro 0% APR offer. These credit cards allow you to pay off your payment over a set period of time without worrying about interest charges. 

You’re ready to travel

Some credit cards are designed specifically with the traveler in mind. They may be affiliated with a specific airline or hotel brand, or are general accounts that are more flexible. Whichever you choose, look for a travel credit card that enables you to earn points or miles for your trips, and has the perks that are most important to you. These may be free checked bags, complimentary entry into airport lounges, credits for TSA PreCheck® or Global Entry, hotel upgrades and even free night stays.

Your current issuer is too low tech

Maybe you got your first credit card with a small community bank or a credit union. These financial institutions may not have all the bells and whistles you are looking for regarding technology. Most of the major issuers have excellent websites where you can easily navigate your statements, enroll in automatic bill pay, set up alerts for upcoming payments, and offer top notch mobile apps. 

You will be sharing your card

Almost all credit card issuers allow account owners to add people as authorized users. Perhaps your child is a young adult and wants to get a jumpstart on their credit rating. Your current card may be too confining for the both of you, or it charges fees for additional cards. In that case, consider another option. Just be aware that you will be liable for the card, no matter who makes the charges.  

If you do decide to add a new card to your credit portfolio, in general, it’s best to keep your other card(s) active so that you can preserve the length of your credit history. You could also consider a product change, which would allow you to switch your card to one that suits you better with the same issuer, while maintaining your credit history. Even if you do move to another issuer though, there’s no need to close your other accounts – unless they charge annual fees. If it’s a no-annual-fee card, feel free to stash it in a drawer (once you’ve paid it off) and enjoy your new card. Or, if it makes sense, continue to use your old card alongside your new one.

>>MORE: 3 reasons you need more than one credit card

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