If I Get a New Credit Card in 2023, It’s Probably Going to Be This Kind

It’s the one type of card I’m missing.

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Key points

• Applying for too many credit cards can hurt your credit score.
• I intend to limit my credit card applications and focus on one specific type.
• Since travel is picking up again, I could really benefit from a travel rewards credit card.

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There’s a reason consumers are often advised not to open too many new credit cards at once. First of all, any time you apply for a new loan or credit card, a hard inquiry is done on your credit report. A single hard inquiry will usually result in a five- to 10-point drop in your credit score, which isn’t usually such a big deal — especially if you have great credit to begin with.

But if you start applying for multiple credit cards in short order, you’ll have multiple hard inquiries and multiple instances of seeing your credit score drop a few points here and there. And those drops can add up.

Don’t open too many credit cards at once

Another factor that goes into your credit score is your credit mix. It speaks to the different types of credit accounts you have. If your personal credit mix consists of nine credit cards and maybe one installment loan, like an auto or personal loan, it doesn’t necessarily paint the best picture of you as a borrower.

Applying for too many new credit cards in a limited period of time can also serve as a red flag to lenders. They might think, “Hmm, why does this person need so much credit all of a sudden?” And if you’re gearing up to apply for a larger loan, like a mortgage, that could be a problem.

Credit score impact aside, the more credit cards you have, the more tempted you might be to spend. And that could lead you into debt. So all, it’s good to be judicious about opening credit cards.

I like to limit myself to one new credit card per year. And I’ll usually try to chase a sign-up bonus in the course of getting a new card. But I won’t just apply for a credit card at random. Rather, I’ll make sure the credit card in question will serve me well.

I hope to stick to my “one card a year” rule in 2023. And there’s one specific type of card I’d like to focus on.

A card I could really use

I used to have a travel rewards credit card, but since it came with a small annual fee, I made the decision to cancel it during the height of the COVID-19 pandemic. I found that in 2020 and 2021, I wasn’t getting any use out of that card since I wasn’t flying anywhere.

But at this point, I know I stand to benefit from a travel rewards card. What I like about these cards is that they commonly come loaded with perks that can make travel less expensive. For example, travel reward cards often entitle you to a free checked bag on a flight. That’s a nice way to save money if you’re traveling often.

And these cards often give you discounts on in-flight purchases. Granted, I don’t tend to spend a lot of money during flights, but you never know when you might need a snack or light meal.

I’ll be looking out for fees

One potential drawback of getting a travel rewards credit card is that these cards often charge an annual fee. In fact, the whole reason I canceled my last travel card was that I didn’t see the point in paying a fee for a card I wasn’t using.

I’m not necessarily opposed to paying an annual fee for a travel rewards card. Often, the savings you’ll reap by using one of these cards will more than pay for that fee. But I do intend to compare my options and see if there’s a no-fee travel card that will meet my needs. And if I do pursue a card with a fee, I’ll need to crunch the numbers to make certain that fee is worth paying.

All told, being careful with credit card applications and spreading mine out helps me keep my credit score in decent shape. And that’s a practice I hope to uphold in the new year. But since I could really use a travel rewards credit card to replace the one I no longer have, that’s the card I’m putting on my radar.