I have 26 credit cards and I use 4 basic questions to decide when it's worth opening a new one

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Credit cards Holly Johnson BahamasCourtesy of Holly Johnson.Holly Johnson.
  • The author, Holly Johnson, has 26 credit cards, but she has no qualms about signing up for more.
  • To decide whether a card is a good fit, she asks herself four questions: What are the terms of the welcome bonus? What are the perks? Will she use her rewards in the next year? Is there an annual fee, and how much is it?
  • Also, she writes, remember that credit cards aren’t for everyone. If you have high-interest debt, you’re probably better off avoiding credit cards all together.

As of this writing, my husband Greg and I have 26 different credit cards we use in different ways.

We use some of our cards for the perks they offer, and we use others to rack up rewards we use to subsidise our ongoing travels. There are also a few cards we use for their “free night” perks and others we keep just because we’ve had them so long. Then there are business credit cards we use to keep all our business spending separate from our personal spending.

But you know what? I still occasionally sign up for new credit cards. That may sound crazy, but there are plenty of reasons I keep my eyes out for new offers.

The thing is, I won’t just sign up for any new rewards card that comes along. Here’s how I decide whether a card is worth it or not:

Does it have a sign-up bonus? If so, what are the terms?

The most important factor that can entice me to sign up for a credit card is the sign-up or welcome bonus it offers. I typically prefer to go after cards that offer more than 50,000 “points” or airline miles, although I’m flexible depending on the type of card it is.

In addition to the existence of a welcome bonus, I ask myself if the bonus is feasible to earn. For example, I got a targeted offer for the Platinum Card® from American Express many years ago that required me to spend $US10,000 within three months to earn the bonus. I couldn’t spend that much on bills and regular expenses, so I opted to wait until a better offer came along.

And it did; less than a year later, I was able to earn 100,000 Membership Rewards points on the AmEx Platinum after spending only $US3,000 within three months of account opening (note that the current welcome offer on the AmEx Platinum is 60,000 points after you spend $US5,000 in your first three months. I have heard some people can qualify for a 100,000-point welcome offer through CreditCards.com’s CardMatch tool, although that offer is subject to change at any time).

What perks does it offer? Can I use them?

Another factor I consider is the type of perks or benefits a card offers. Not all cards offer perks I’ll actually use, but I can be enticed into signing up for new cards if they offer something in addition to rewards.

Case in point: I signed both myself and my husband up for the Platinum Delta SkyMiles® Credit Card from American Express last year. This was partly because we were able to earn an initial rush of Delta SkyMiles I knew we could use, but we also got a statement credit if we booked Delta flights, priority boarding on Delta flights, and $US29 entrance into Delta Sky Clubs, among other perks. We had a lot of flights on Delta coming up, so the collection of benefits the Platinum Delta AmEx offers pushed me over the edge.

Could I use the rewards I earn in the next year?

While I love points and miles, there are some I just don’t use – or can’t use. For example, I would never sign up for a co-branded airline credit card from an airline I never fly with – unless, of course, I had a concrete plan in mind to fly with them soon. And I would never earn hotel points with programs I don’t use.

Because my goal is always “earn and burn” when it comes to travel rewards, I try really hard not to pursue points and miles I don’t think I can use in the next 12 months.

Is there an annual fee, and is it worth it?

While I love earning travel rewards with new credit cards and their sign-up or welcome bonuses, I always check on annual fees. It’s easy to justify getting a new card if the annual fee is waived the first year, but that’s not always the case. If I’m paying an annual fee, it has to be worth it.

When I signed up for the Hilton Honours Aspire Card from American Express last year, for example, I was initially put off by the $US450 annual fee. But when I added up the welcome bonus and benefits, I found I could get many times the fee amount in value. So, I signed up and I haven’t had any regrets.

The bottom line

While signing up for new credit cards seems exciting, there’s a lot to think about before you pull the trigger. Are the benefits worth any fees, for example? And will you actually use whatever perks the card gives you?

On the flipside, there’s even more to think about if you have debt. As you probably noticed, I never consider the interest rate on credit cards I sign up for since I’m 100% debt-free and never pay interest anyway. If you have debt, you may want to avoid new credit cards all together – or, at the very least, look into 0% APR cards you can use to pay off debt and avoid it in the future.

Curious which credit cards I use the most and why? Here are some of my favourites:

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