Is opening a new credit card worth the potential impact?
I’m trying to decide whether or not I should open up a second credit card. The primary reason is to have a backup credit card in case my only (and oldest) card is cancelled/eliminated for any reason. Length of credit history is 15% of your credit score, and I do not want to put all of my eggs in one basket. The second reason is to simply get a credit card with better rewards.
Currently, I pay my credit card off in full every month, and have done this for the past several years. I also have a car loan and a student loan (I’m not sure how these factor into my credit score). My credit score is 760+.
I’m aware that opening a new credit card can temporarily hurt your credit score by being a “hard pull” against your credit score, but what I’m more concerned about is that the second credit card will cut my “average length of credit history” in half. As an example, if my current credit card has been open for 10 years and I open up a brand new card – my “average length of credit history” will plummet from 10 years to 5. Is this a reasonable fear?
Aside from that, is my rationale valid for wanting a second credit card? Or is it safe to ride out one credit card for life?
The negative impact to your score will be minimal, and short lived. Long term, your are better off having a few cards than just the one.
I’ve found, more than just one isolated time, that the card I was about to use in an automated machine didn’t swipe. The strip had started to go bad. It was no issue to pull out another card. Yes, in a grocery store or other store, a clerk can type your number in, but there are times, such as at a parking machine, that there’s no option, no manual way to do this.
I also have had multiple times a card needed to be re-issued due to some kind of compromise. The new card takes a few days to arrive, and the extra card helps avoid any inconvenience.
Having a backup credit card is a good idea. Last year I had my credit card number cancelled and changed 4 times in 6 months due to fraud. Each time it happened, I was without a credit card for several days while I waited for a new card, and it was inconvenient.
You can apply for a new credit card with a different bank for a backup. However, what I did was contact my credit card company and ask if they would issue me a second card with my name and a different number, tied to the same account, which they did. So I have two different cards on the same account, and if one card number needs to be cancelled, the other still works.
In my opinion, you have nothing to fear about your credit score. Your credit score is already excellent, and it doesn’t matter if it goes up or down, even by 40 or 50 points. It just isn’t a concern. By the way, my oldest credit card account is less than 3 years old (I only have 2 credit accounts), and my credit score is higher than yours. But your credit score is already high enough to qualify for the best rates.
And, of course, continue to pay the credit card bill in full every month. Don’t spend more than you can pay, and don’t pay any interest.
I have dozens of credit cards and excellent credit. Always pay at least your minimum. Pay it all off if you can. They’ll hate you for that.
You should absolutely have a backup card in case there’s a problem.
Different cards offer different deals periodically. Ex: 5% off gas for 3 months.
People really are excessively paranoid about credit score.
Having a second card (backup, online-only, whatever other purpose) will have brief and minimal effects, assuming you are now handling the current card well (minimal, preferably zero, balance carried from month to month) and handle the new card equally well.
If you are already carrying balances on your current card, getting another card may be a bad idea and fixing that will probably be the single best thing you can do for your credit history.