Mastering Your Credit
Your first credit card is a solid introduction to the wonderful world of credit. With it, you’re introduced to points, cash back and credit maintenance. Usually, your first credit card will have a fairly low credit limit, somewhere in the realm of $500-$1,000 – or it might even have a cash security deposit.
In contrast, your second credit card will usually have a higher credit limit, better rewards and maybe even a sign-on bonus.
What Credit Score Do You Need for a Second Credit Card?
There aren’t any hard-and-fast rules for the required minimum credit score for a second credit card. Many people say that you’ll need above 670 to qualify for another credit card. As a general rule, though, you should be paying off the balance on your first credit card in full every month to avoid interest charges and keep a low utilization ratio for at least 8 months before opening your second card.
Five main elements make up your credit score:
- On-time payments (35%).
- Utilization ratio (30%).
- Length of credit history (15%).
- Variation of open credit lines (10%).
- New credit/inquiries (10%).
If you’re looking to open up a second credit card, then, the two that you should be focused on most are 1) on-time payments and 2) utilization ratio. Those two alone already make up 65% of your score, so they’re very important and they’ll work hand-in-hand.
What is a Utilization Ratio?
A utilization ratio is the sum of all of your outstanding debt divided by the total debt limits available to you. This is important for your first credit card since your total debt limit is so low.
For example, if you have a credit card with a limit of $1,000 and you fail to pay it off in full one month, letting a balance of $600 roll over, your credit utilization just shot up from 0% to 60% – which makes you look very risky to a lender.
What to Look For in a Second Credit Card
Some things that you might want to look for in a second credit card include:
- No annual fee: Although this largely depends on personal preference, some credit cards have an annual fee that’s so high you’re unlikely to spend enough money to earn the fee back in rewards. If you want a Platinum American Express card, for example, with a $695 fee for the lounge access but you only travel once every couple of years.
- High cashback rewards, in the realm of 1.5-2%: Some credit cards will have cashback rewards for as much as 1.5-2%, which means that you’ll get 1.5-2c back for every $1 that you spend.
- Spending bonus: As long as you’re managing your credit wisely, you can easily make some money from spending bonuses. “If you spend over $1,000 in 90 days, you can get a statement credit worth $200.” For most people, as long as they aren’t carrying a balance on their credit cards from month to month, that’s a free $200.
- Rewards that match your lifestyle: Although we railed on the Platinum American Express Card above, it should be noted that if it fits your lifestyle, it might be the right card for you. If you drive a lot for work, a card with 5% cash back at gas stations might be interesting. If you love dining out, you might want to look out for 5% cash back on restaurants.
The Best Second Credit Cards
The best second credit cards have no annual fees (since managing multiple cards is hard enough), high cashback rewards of 1-2%+, a spending bonus and rewards that match your lifestyle.
1. Citi Rewards+ Card
The Citi Rewards+ has no annual fee, 1-2% cashback rewards depending on the category and it gives you 20k points back after $1,500 in spending in 90 days, which is redeemable for up to $200 in gift cards. To top it off, it also has a 0% intro APR on balance transfers (which shouldn’t apply since you’re probably paying off the first card in full, but it’s worth noting).
However, there are some things you should note to make sure this card fits your lifestyle. Some of the cons include a foreign transaction fee. If you’re a frequent international traveler, this might not be the right card for you.
2. Chase Freedom Flex
Some of the pros for this card include no annual fee, 5% cashback on gas and grocery, and a $200 welcome bonus after $500 in spending within 3 months. The welcome bonus is extremely easy to accomplish and can probably be accomplished using gas and grocery expenses for most.
However, the travel rewards must be booked through Chase’s website, which often has higher prices and fewer options than you’ll find on most other websites.
3. Prime Visa
If you shop at Whole Foods or Amazon frequently, you’ll get a 5% cashback bonus with this card. Additionally, there’s no annual fee and a $100 gift card instantly.
The downside is that you’ll need an Amazon Prime membership to even apply. Still, since Amazon Prime memberships are so ubiquitous, we figured it would make a great second credit card.
Conclusion: How to Choose the Best Second Credit Card
The best second credit card has no annual fee, good cashback rewards and a decent welcome bonus. In this article, we gave you some tips for building your credit so that you can get a second credit card: pay your balance in full and keep a low utilization rate.
After you’ve built up your credit, you can apply for some of our credit card suggestions.