2 Reasons I Won't Be Opening Any New Credit Cards in 2024
Opening a new credit card won't work for me next year for two big reasons. Find out what they are and if they apply to your situation, too.
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In 2024, I'll be making a lot of financial moves. I won't be opening a new credit card though. While a new credit card can come with great benefits, including gaining access to new cardmember rewards and perks, it's not the right move for me this upcoming year. Here's why.
I'm hoping to refinance my mortgage
There's one huge reason why I'm not planning to open a new credit card in 2023: I'm hoping to refinance my mortgage.
In 2023, I took out a loan to buy a home. And, like most recent home buyers, I borrowed at a time when rates were pretty high. The interest rate I ended up getting on my loan was above 7.00%, which I'm not very happy about.
I am, however, hopeful that mortgage rates will fall in 2024 and if they do, I want to take advantage of that by refinancing my loan. Typically, since there are costs associated with refinancing, it only makes sense to do so if you can drop your rate by around half a percentage point at a minimum and if you plan to stay put for a long time to cover the upfront costs (which I do).
Since I'm hoping to lower my rate as much as possible, I want the best possible credit score so I can qualify for a very competitive loan. And opening a new card could mean lowering my credit score and not getting as good a deal.
Now, there's not necessarily a huge decrease in your score when you open a new card. You'll get a new inquiry on your credit record, which is a note that a lender has checked your credit, and that can drop your score by five to 10 points. The average age of my account history is also not as long as I would like it to be, and that factor accounts for 15% of your FICO® Score. Opening a new account and shortening the average length of my credit history even more could cause an additional reduction in my credit score.
Even a small difference in mortgage interest rates can make a big difference over time. For example, a loan at 6.00% costs $599.55 per month for each $100,000 borrowed and costs $115,838.19 in total interest over time for a 30-year loan. If my credit score was just a little worse and I ended up with a 6.10% rate instead of a 6.00% rate, the monthly payments would jump to $605.99 per $100,000 borrowed and $118,158.12 in total interest costs.
Those seem like small differences, but remember a mortgage is often for more than $100,000. On a $400,000 loan, for example, the monthly payment would be $25.78 more per month for the 6.10% loan and interest would be $9,279.73 more over time.
There's no reason to take a chance of interfering with my ability to get the best and most affordable loan just to get a new credit card. And if you are going to be getting a mortgage, car loan, or other big loan any time soon, you should also avoid doing anything that could change your positive credit profile for the worse.
I already have cards that are a great fit
I'm also not interested in opening any new cards because my cards are already a good fit. I opened a new airline card not too long ago that provides the travel perks I need, and my card is well matched to my spending.
If I didn't have a card that rewarded me for the things I buy often, I might look into getting a card at the end of the year after refinancing my mortgage. But as it stands, I don't feel any real need to do so, especially since I won't want to feel pressured to spend enough to get a new welcome bonus so soon after getting a loan.
If you aren't getting a big loan any time soon and you don't have a card that rewards the spending you do the most, or if you are looking for some new cardmember perks your current card doesn't offer, then it may make sense for you to open a new card. But, if you're like me and pretty content with your cards, you may want to wait -- especially if you may be doing something big with your money this year.
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