How Long to Wait Between Applying for Credit Cards
Whether you’re looking for a new credit card or you’re looking to take advantage of a generous welcome offer, you’ve likely wondered how long to wait between applying for credit cards. The simple answer is six months, but things aren’t that simple.
The length of time between credit card applications should really be based on your goals, credit report, and what rules lenders have in place. Keep reading to learn more about how long to wait between applying for credit cards
How long to wait between credit card applications
Depending on your credit score, many experts recommend waiting three to six months when applying for new cards. That’s because a hard inquiry is made whenever you apply for a new credit card. By waiting up to six months before applying for a new credit card, your credit score will have time to recover.
While this is solid advice, depending on your situation, there are a few different rules to consider for various credit card issuers.
The same day
As weird as it sounds, it can actually be beneficial to apply for a number of credit cards on the same day. That’s because multiple credit card applications will typically only appear as a single inquiry on your credit history.
For example, let’s say you applied for the Scotiabank Passport Visa Infinite Card and the Scotiabank Gold American Express on the same day. Even though it would have been two separate credit applications in a short period of time, a credit check would likely only happen once.
90-day rule
Both RBC and American Express have a 90-day rule. This means that if you’ve already applied for an RBC or American Express Card, you won’t be approved for another one within 90 days. To be clear, this applies to each individual financial institution. For example, you could get an RBC and Amex card within 90 days of each other. You just wouldn’t be able to get two cards from the same bank.
There is an exception to this rule. Business credit cards would be counted as a separate application from personal cards, so you could get one of each within 90 days.
Six to twelve months
As mentioned, most experts recommend spreading your applications apart by three to six months to limit the number of hard inquiries on your account. This is likely solid advice since the credit bureaus: Equifax and TransUnion don’t like to see people with too many inquiries or too much credit. They could be seen as red flags and affect your credit score.
12-month rule
The 12-month rule applies to people that are looking to take advantage of a sign-up bonus. Some credit card companies, such as TD, clearly outline that you’re only entitled to the welcome bonus once during a 12-month period. If you’re looking to maximize your rewards credit cards, you need to keep this rule in mind, as it may affect how many times you apply for a new card. It’s worth mentioning that some credit card providers have a 24-month period instead of 12.
Once-a-lifetime
Cardholders may be surprised to learn that some bonuses only apply to once-a-lifetime. When you read the fine print for American Express applications, some cards clearly state that the bonus is a one-time deal. Now how often they enforce this policy is up for debate.
Does applying for multiple credit cards hurt your credit?
The short answer is yes. Every time you apply for credit, your credit score will typically drop by 10 points. Having too many recent inquiries could also affect your mortgage application. Your lender might wonder why you’re looking for access to so much credit.
Keep in mind that it’s not just credit card applications that affect your credit score. If you’re applying for new lines of credit or auto loans, that will affect your credit score too.
On the other hand, let’s say your credit score is currently 800+, which is considered excellent. If you made a few recent credit applications, it likely wouldn’t be a big deal, even if your credit score dropped.
Reasons to get multiple credit cards
Now you know how long to wait between applying for credit cards. The next natural question is, why would you get multiple credit cards? Well, depending on your situation, it might make sense to have two, three, or even more credit cards.
You want to diversify
Having two credit cards to make purchases is pretty normal. Occasionally, your credit card might not work at a specific merchant. For example, Costco only accepts Mastercard. In addition, sometimes your card might not work for one reason or another. Having a backup card in your wallet will ensure you always have access to credit.
You want to increase your credit utilization ratio
The amount of credit you use relative to what you have access to is known as your credit utilization ratio. For example, let’s say you have a credit limit of $5,000, and you regularly charge $2,500 to your card. That would give you a credit utilization ratio of 50%, which is considered high. However, if you were approved for another credit card with a $5,000 limit, that would give you a total credit limit of $10,000. As a result, your new credit utilization ratio would be 25%, which is better in the eyes of the credit bureaus.
You want to take advantage of welcome bonuses
Many of the best travel rewards credit cards in Canada offer generous welcome bonuses. Without a doubt, these offers are the quickest way to earn more reward points. Once you have enough points, you could use them for free or discounted travel. Of course, you need to adhere to the rules listed above.
When to avoid applying for another credit card
Even though you now know how long to wait between applying for credit cards, that doesn’t mean you should do so as soon as you’re allowed to again. In some cases, it makes sense to hold off on new applications.
- You need a major loan soon – Many lenders don’t like seeing people who have recently opened new credit lines. They’ll likely wonder why you’re looking to access so much credit.
- You may overspend – Data shows that people spend more when using credit. If you have access to more credit, you may spend more and go into debt.
- You could get banned – Some banks and loyalty programs may consider consistent credit applications suspicious. It’s within their right to ban people to prevent further abuse.
Generally speaking, if you have good credit, then applying for a new credit card every six to twelve months won’t matter. You could even go as early as three. That said, you need to have a reason for applying for a new card. You shouldn’t apply, just for the sake of applying even if there’s an excellent sign up offer.