Answer First, Add Later

Credit cards are good for many reasons, including building a credit history and increasing your credit score. Perhaps a credit card deal you spotted has you thinking of adding a new card to your wallet. Before you do, we suggest you answer the questions below first.

How Are You Handling Your Current Cards?

This might seem obvious, but we feel like we should say it anyway: If you’re struggling with the credit cards you have, it’s not a good idea to add another one to the mix. Signs that you’re having difficulty handling your cards include missing payments, being late on payments, never being able to pay the balance in full and using too much of your available credit. Before you sign up for a new credit card, get to a good place with your current ones.

What Benefits Are You Looking For?

Consider what you want in the new credit card. You should try to sign up for one that offers you the most benefits. As for cash back cards, make sure the card you’re getting gives you the most bang for your buck.

What is Your DTI?

Knowing your debt-to-income (DTI) ratio can help you figure out if you’ll be able to safely handle another credit card. To calculate the ratio, divide your monthly debt payments by your gross monthly income. A good DTI is 36 percent or less. However, if you want to add another credit card, make sure your DTI is well below 36 percent so that you don’t cross that threshold.