Should I apply for a new credit card to use for my holiday shopping?

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It’s that time of year when retailers are full of holiday cheer for you to spend more and trying to entice you by promising savings if you just open up a store credit card with them.

Or maybe you heard that opening a new credit account can help your credit score by decreasing your credit utilization. Your credit score can improve if you increase your amount of credit available compared to how much you’ve used (and keep it below 10%) but if you’re interested or currently trying to repair your credit, getting another credit card now is probably not a good idea. Here’s why.

Not if you have a lot of other debt

According to the 2015 Nilson Report, total household debt is just about as high as ever, just slightly under what it was in 2006, at the height of the economy. But credit card debt accounts for just 6.5% of total debt which is at its lowest level since before 1990.

That means that households have a high degree of mortgage debt and student loan debt and debt payments are eating up their available income. If that’s you, now is definitely not the time to add another credit card account just for holiday shopping.

Not if you will be tempted to spend more this holiday

If you talk to any behavioral finance expert (and I’ve interviewed many), they overwhelmingly say the research shows you will always spend more when swiping a credit card than if you had to reach into your pocket and count out the cold, hard cash.

Some recent research from Deloitte’s 2015 Holiday Spending Survey found that Americans are already poised to spend quite a bit more during the holidays this year. They are already planning to spend money on many things that are not for gifts, including clothes for themselves and others while out holiday shopping. They are also planning to increase their spending on holiday home décor and holiday entertaining both at home and out with friends and family.

If you already have credit card or debt problems, you certainly don’t want to unconsciously spend more with a dangerous vehicle to help you speed towards more debt.

Not if you need every point of your credit score to count

Maybe you have your sights set on a car loan or mortgage loan some time in the New Year. If so, getting a new credit card now might ding your credit score. Not only will the new inquiries for a credit card (if you applied for a few in the hopes of getting one) cause a temporary decrease in your credit score, according to FICO, but opening the new account could also cause your score to drop some more. The older the accounts, the better for your FICO credit score. Once you use the card and carry a balance, your score will drop even more.

So, if you are trying to raise your credit score, you might not be able to afford the dings associated with applying for and opening a new credit card account.

Not for the promotions, discounts or promised savings

Are the card issuers offering you discounts of up to 20%, statement credits, cash-back rewards and interest-free periods for purchases? The promises sure sound attractive during the holidays, but store credit cards are rarely worth the savings. That’s because they typically charge the highest interest rates when compared with traditional bank credit cards and the interest rates they charge you forever are higher than that one-time savings discount. They also usually offer very low credit limits which does not help the credit utilization portion of your FICO credit score very much.

The only time these store cards are worth opening up for the holiday savings is if you are definitely able to pay your balance before the due date, or before the interest-free period is up, to take advantage of the savings, otherwise these offers are just more debt waiting to happen to you in the New Year.

The only reasons to apply for a new credit card for your holiday shopping

If you do not have debt problems and are not carrying any credit card debt and have an unlimited amount of cash so you know beyond a shadow of a doubt that you will be able to pay your balance (on all your cards, not just the new one) no matter what happens before the due date, and it is a rewards credit card, then go ahead and open that new credit card account and spread your holiday cheer with family and friends.

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