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Consider these situations before you decide if you should get a credit card

CNBC Select breaks down whether you should get a credit card depending on your needs and current financial situation.

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Credit cards are one of the most common ways you can build credit and finance large purchases. Plus, many come with additional perks, like the opportunity to earn cash back or miles. However, you should take a minute to consider whether it's the right time to add a new card to your wallet before you apply.

Many people open their first credit card at age 18 to establish a credit history, while others apply for a new card when there's a big trip on the horizon or to earn rewards

But there are also several alternative ways to build credit than just opening your own credit card, such as reporting your monthly phone and utility bills to Experian Boost or becoming an authorized user on someone else's card. You should take the time to evaluate your reason for opening an additional credit card, since the more you have, the more there is to keep track of — from multiple due dates to various statement balances.

Below, CNBC Select breaks down how to decide if you should get a new credit card. We review situations when it probably makes sense to apply for more credit and when you should refrain for the time being.

When to get a credit card

If you want to open a credit card, these are the best times to apply:

  • You turn 18: Credit cards require you to be 18 in order to open your own account, making it the ideal time to get a card. Opening a card at 18 allows you to get a jump-start on building credit so you can establish a good credit history sooner rather than later. Keep in mind that you'll need to have a steady source of income to qualify. (Check out the best college student credit cards.)
  • You have good credit: If your credit is in good standing, meaning you have a credit score of 670 or greater, you're in a strong position to qualify for a credit card. Plus you can likely qualify for some of the best cards that require good or excellent credit.
  • You want to build or rebuild credit: If you don't have a credit history or have poor credit, opening a new card can help you raise your credit score. Secured cards, like the Capital One® Secured Mastercard®, can be a great option and often provide more lenient credit requirements compared to unsecured cards.
  • You want to finance a large purchase: Many credit cards offer intro 0% APR periods that can provide you with a long period of time to finance large purchases, such as appliances or furniture. The U.S. Bank Visa® Platinum Card has an industry-leading 0% APR for the first 20 billing cycles on purchases and balance transfers (then 13.99% to 23.99% variable APR.)
  • You're paying off debt: If you're struggling to pay off credit card debt, a balance transfer credit card can help you rid yourself of debt faster and cheaper than keeping it on a high interest card. Balance transfer cards provide interest-free periods up to 21 months, though you'll typically need good or excellent credit to qualify.
  • You're planning a vacation: Credit cards can provide travel insurance for trip delays and cancellations, lost luggage reimbursement and more when you pay with an eligible travel credit card. This is a great way to save on added insurance plans and provides peace of mind when you book vacations.

When not to get a credit card

While credit cards can be a great asset, they're not always the best option — especially under these circumstances:

  • You spend above your means: While a line of credit can be helpful, it can also be a risk for people who spend more than they can afford to repay. It can be harder to limit credit card spending compared to debit card or cash transactions since you don't need to have the money available at the time of purchase. If you overspend and don't pay your bill in full every month, you can fall into costly credit card debt.
  • You lost your job: Card issuers consider your income when deciding your approval chances, and a reduced income can affect your ability to qualify for a card since it shows you have limited funds to repay debt. If you apply for a card with a reduced income, you may be denied and the inquiry from submitting an application will likely cause your score to drop a few points.
  • You plan to apply for a major financial product: If a home or new car is in your near future, you should hold off on opening a new credit card since applications result in a hard inquiry that can potentially lower your credit score. This may also reduce your chances of getting the best mortgage or auto loan rates.
  • You recently applied for credit products: When you apply for new credit products (whether it's a credit card or loan), an inquiry will typically appear on your credit report, which can lower your credit score. If you recently applied for several credit products, the dip in your score may reduce your qualification odds. Plus some card issuers consider how many cards you've opened within the past two years when deciding if you qualify. For instance, Chase has the 5/24 rule where you can't be approved for most Chase cards if you've opened five or more personal credit cards within the past 24 months.

Bottom line

At the end of the day, getting a credit card can either be a great way to build credit and finance purchases but it can also hurt your credit score and cause debt — it ultimately depends on your individual situation. Opening a credit card is a big decision that shouldn't be made based on a welcome bonus or unique card design, but instead based on your current ability to repay charges and the positive impact it can have on your credit score and finances.

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Information about the Capital One® Secured Mastercard® and U.S. Bank Visa® Platinum Card has been collected independently by CNBC and has not been reviewed or provided by the issuers of the cards prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.