6 Signs That You Shouldn’t Get a Credit Card

Quick Answer

Credit cards can be a great way to earn rewards and finance large purchases, but opening a credit card isn’t the best idea for everyone. If you're already overburdened by debt or have a history of overspending, you may want to think twice about the decision to get a credit card.

A man wearing a gray shirt is leaning on his hand has he looks at a document with his laptop open on the table.

At Experian, one of our priorities is consumer credit and finance education. This post may contain links and references to one or more of our partners, but we provide an objective view to help you make the best decisions. For more information, see our Editorial Policy.

A credit card can be a great tool for making purchases you pay off over time, covering an emergency expense, earning rewards and getting other benefits. But there are some situations where getting a credit card isn't a wise decision or where a credit card should at least be approached with a great deal of caution.

If you're considering getting a credit card, here are six signs that you may want to think twice before moving forward, as well as some tips on how you can make it work if you do get one.

1. You're Prone to Overspending

If you've had issues with overspending on a credit card in the past, that available credit could be difficult to resist. Studies have shown that people tend to spend more with credit cards than if they were to use cash or a debit card, and if you're not careful, you could dig yourself into a significant financial hole.

If you want to get a credit card to build credit, though, you could apply for a card that offers a low credit limit, such as a secured credit card or a store credit card. This approach will limit the risk of overspending.

However, you'll want to make sure to keep an eye on your balance relative to your limit. Your credit utilization rate is an important factor in your credit score, and if you're regularly bumping up against your credit limit, it could cause your score to decline.

2. You Have a Lot of Debt Already

If you're struggling with student loans or have debt from other types of credit, creating a situation where you could add more to your burden may not be the best option. While credit card minimum payments are low, adding an extra debt obligation could spread your budget too thin, making it harder to keep up with your payments. If you miss a payment by 30 days or more, it could significantly damage your credit score.

That said, you may still be able to get a credit card if you have enough income to comfortably pay all of your monthly bills on time. It'll also help if you only use your card for things you would typically buy with or without the card.

3. You Want to Avoid Interest

The average interest rate on a credit card is 16.44%, according to November 2021 data from the Federal Reserve, but many cards charge upwards of 20%. You can avoid interest charges by paying your bill in full every month.

If you can't afford it in one month, you'll be slapped with interest on the balance you carry over to the new month, and you'll also lose your grace period until you've paid the balance in full. Additionally, cash advances often come with a higher interest rate and don't get a grace period.

There are plenty of steps you can take to avoid paying interest. If you use your card sparingly as a way to build credit and avoid cash advances altogether, that'll make it easier to pay your bill in full every month. You can also make sure to simply use the card only when you know you have enough money in your bank account to pay it off.

4. You're Not Living on a Budget

Sticking to a budget is no easy feat, especially if it's your first time using one. But if you're not setting goals for spending your money and tracking your expenses, it can be easy to let your spending get out of hand. Because credit cards make it easy to spend beyond your means, getting one could do more harm than good.

Whether or not you decide to apply for a credit card, create a budget by tallying up your average income and expenses over the past few months. Then, take a look at your financial goals, such as savings, investing and paying off debt, and consider ways you can reallocate your spending to work toward those goals.

With monthly spending goals in place and consistent expense tracking, it'll be easier to use a credit card responsibly.

5. You're Applying for a Mortgage Soon

When you apply for a mortgage, lenders will review your credit history for recent loan and credit card applications. Because a mortgage is such a long commitment for both you and the lender, they want to make sure that there's no reason to believe that you'll struggle to make your payments.

In general, it's best to avoid applying for a credit card or any other loans within six months of your mortgage application. If you have a specific credit card in mind, consider waiting until after your mortgage closes to apply.

6. You Can't Afford to Pay in Full Every Month

If you're thinking about getting a credit card because you can't afford your everyday expenses, think carefully before you proceed.

While the allure of a low minimum payment is strong, you'll still need to pay off your purchases with interest on top of that. Over the long run, using a credit card to cover expenses you can't afford is unsustainable and can ultimately make your financial situation much worse.

If you're having trouble with necessities, consider looking into assistance programs through government agencies and community organizations as a way to get relief.

Alternatives to Opening a Credit Card

Depending on your situation, there are other ways you can meet your needs without turning to a credit card. Here are a few examples:

  • Take a second look at your budget. If you're considering a credit card because your budget is tight, take another look at your spending to see if you can cut back in certain areas or even earn more money to make ends meet.
  • Take out a personal loan. If you're thinking about using a credit card to help you consolidate debt or pay for a large expense, you may be able to get better terms with a personal loan. On average, personal loans charge lower interest rates, and if your credit is in good or excellent shape, you could secure a single-digit rate. You can use personal loans for just about anything, including debt consolidation.
  • Open a checking account with debit card rewards. If you're thinking about a credit card because you want to earn rewards, there are several debit card rewards programs out there that offer cash back on every purchase you make or even bonus rewards with certain merchants. You can also take advantage of cash back websites like Rakuten and Topcashback.

Whether you decide to apply for a credit card now or you want to wait, make it a priority to monitor your credit regularly. Keeping your finger on the pulse of your credit history can help you address issues that are holding you back and take steps to improve your credit over time.