Credit is getting tougher to obtain. What to do before you apply for a new card

CNBC Select shares advice for improving your odds of credit card approval as the holiday shopping season approaches.

Many Americans are still planning to spend heavily on holiday purchases. According to PayPal’s Holiday Shopping Survey, 64% of U.S. adults expect to spend the same amount or more than they did during the previous holiday season.

A credit card can be a useful tool for handling gift buying, travel and other seasonal expenses while earning rewards. But approval can vary widely depending on the card you want.

A Federal Reserve Bank of New York survey released in September found that more Americans think credit is harder to obtain than it was a year earlier, and other data support that view.

In a separate Federal Reserve survey on bank lending practices, 6.0% of bank respondents — including 10.5% of large banks — said standards for credit card approvals had tightened somewhat.

If you’re concerned about being approved for a new rewards card before the holiday rush, here are a few things to think about before applying.

Steps to take before applying for a new card

Do you have a question about credit cards or travel rewards?

Senior reporter Jason Stauffer answers reader questions about getting the most out of credit cards in his weekly Points Pro column. Submit yours here.

Set your priorities and spending limits

Start by deciding how much you can comfortably spend during the holidays. That should include gifts, travel, food and other season-related costs. Ideally, you should pay your balance in full each month to avoid interest. If you do carry a balance, focus on paying it down before taking on additional discretionary spending.

It’s also worth asking whether you truly need another credit card or whether tightening your holiday budget would be the better move. The season can make overspending easy, which is one reason it can be a good time to start budgeting if you haven’t already.

Quicken Simplifi is a budgeting app that connects with more than 14,000 financial institutions and provides categorized views of spending, savings and income. It can also track subscriptions, rent and credit card payments. It does not offer a free trial, but it includes a 30-day money-back guarantee.

Quicken Simplifi

• Cost

  50% off limited-time offer: $3.49 per month for the first year, then $6.99 per month (billed annually). Seven-day free trial

• Standout features

  Users can run customizable reports based on spending, income and savings. Personalized spending plan adjusts in real time.

• Categorizes expenses

  Yes, but users can customize

• Links to accounts

  Yes, bank, credit cards, loans, investment accounts

• Availability

  Offered in both the App Store (for iOS) and on Google Play (for Android)

• Security features

  Financial data from bank servers is transmitted using 256-bit encryption

Terms apply.

Pros

• Syncs with bank, credit card and investment accounts
• Customizable reports based on income, spending and savings
• Robust investments dashboard
• Refund tracker
• Includes subscription tracker
• Credit monitoring

Cons

• No free tier
• No bill-pay feature
• Quicken data can't be imported
• Can't roll over unused funds to the next month

View More

Before looking at cards, make a list of your non-negotiables. For example, if you travel internationally often, a card with no foreign transaction fees should be near the top of your list.

You should also decide what kind of rewards you want based on how you expect to redeem them. If you prefer to use rewards for airfare or hotel stays, look for travel cards that earn points or miles. If you want statement credits or direct deposits instead, cash-back cards may be a better fit. Some cards offer both.

For example, the Citi Double Cash® Card earns a flat 2% cash back on purchases: 1% when you buy and another 1% when you pay your bill. The card technically earns Citi ThankYou® Points, which can be redeemed for cash back or used for travel, including transfers to Citi hotel and airline partners.

Spotlight

Receive an intro APR for 18 months on balance transfers and earn at least 2% cash back on every purchase.

Good to Excellent 670–850

What makes the Citi Double Cash® Card stand out is that it ranks near the top of its category in several areas. It is a strong choice if you want flat-rate rewards, a balance transfer intro APR or no annual fee.

• Balance transfers get a long intro APR
• Generous flat-rate cash-back rewards structure
• Earns transferable rewards
• No annual fee

• It has a foreign transaction fee
• Intro APR only applies to balance transfers
• Points transfer ratios are lower than those of premium cards

Highlights

Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.

• Earn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou^® Points, which can be redeemed for $200 cash back.
• Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. To earn cash back, pay at least the minimum due on time. Plus, earn 5% total cash back on hotel, car rentals and attractions booked with Citi Travel.
• Balance Transfer Only Offer: 0% intro APR on Balance Transfers for 18 months. After that, the variable APR will be 18.49% - 28.74%, based on your creditworthiness.
• Balance Transfers do not earn cash back. Intro APR does not apply to purchases.
• If you transfer a balance, interest will be charged on your purchases unless you pay your entire balance (including balance transfers) by the due date each month.
• There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).

Balance transfer fee

There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. A balance transfer fee of 5% of each transfer ($5 minimum) applies if completed after 4 months of account opening.

Foreign transaction fee

3%

Improve your chances of approval

Approval for a credit card depends on several factors, so there is no single guaranteed way to boost your odds. Your credit score is usually the biggest factor, but current debt, income, recent credit applications and other details can also matter.

Review your credit score and credit report

If you need to raise your score a little to qualify for the card you want, tools such as Experian Boost® may help close the gap.

Experian Boost is a free tool that lets you report payments for bills such as your cellphone, utilities, streaming services, rent and more. You connect your bank account and choose which bills to include. It also works retroactively, so you can receive credit for past eligible payments.

Experian Boost®

• Cost

  Free

• Average credit score increase

  13 points, though results vary

• Credit report affected

  Experian®

• Credit scoring model used

Results will vary. See website for details.

It’s also smart to check your credit report regularly for errors that could hurt your chances of approval. If you find incorrect information — such as a missed payment that never happened or a wrong balance — get it corrected before you apply.

Check whether you qualify

Prequalification and preapproval tools can give you a useful sense of your odds, though neither guarantees approval. Still, they can be strong signs that you may be eligible for the card.

A full application usually triggers a hard credit inquiry, which can temporarily lower your score by a few points. Prequalification and preapproval rely on a soft credit check, which does not affect your score.

Before submitting a formal application, narrow your choices to one or two cards. Applying for several cards in a short period can hurt your chances because it creates more hard inquiries and may signal to lenders that you are a higher risk.

Pick a card that matches your finances

If your main goal is simply to access more credit, a flashy rewards card may not be necessary. Premium cards can be appealing because of statement credits or airport lounge access, but you may not use enough of those perks to justify the annual fee.

If you have limited or poor credit, a secured credit card may be the better choice. Secured cards require a security deposit — usually a few hundred dollars — to open, and that deposit becomes your line of credit.

The Discover it® Secured Cash Back Card is one of the strongest secured cards available, and no credit score is required to apply. You can open the card with a refundable deposit as low as $49 and still get at least a $200 credit limit. It also offers a strong cash-back rate on rotating bonus categories, and Discover will match all the cash back you earn after your first year.

INTRO OFFER: Unlimited Cashback Match for all new cardmembers.

*Terms apply.

Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.

• Refundable deposits as low as $49 unlock credit lines starting at $200.* No credit score required to apply.**
• INTRO OFFER: Unlimited Cashback Match for all new cardmembers. Discover will automatically match all the cash back you've earned at the end of your first year! There's no minimum spending or maximum rewards.
• Earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases.
• Smart habits, like making on-time payments, can help you build credit with responsible use***
• When you establish a positive track record, you'll earn your deposit back and upgrade to the Discover it Cash Back Credit Card.
• Redeem cash back for any amount. No annual or hidden fees
• With $0 Fraud Liability you're never responsible for unauthorized purchases on your Discover Card
• Terms and conditions apply
• * Deposit amount will be $49, $99, or $200 based on creditworthiness. Upon qualification, your security deposit will be returned and your account unsecured. All other card terms and features will remain the same.
• ** We may use credit scores if available.
• *** Many factors affect your credit, such as payment history and amount of credit extended and used. Using your credit responsibly may help you build good credit

There are also unsecured cards for people with limited-to-fair credit. The Chase Freedom Rise® (see rates and fees) is one example, with 1.5% cash back on everything you buy and no annual fee. You can also improve your approval odds if you already have a Chase bank account with at least $250 on deposit.

Spotlight

Your approval odds are increased if you have at least $250 in a Chase checking or savings account.

See rates and fees. Terms apply. Member FDIC.

The Chase Freedom Rise® is among the more rewarding cards available to people who are new to credit.

• No credit history required
• Above average flat-rate rewards
• No annual fee

• Small welcome offer
• Has a foreign transaction fee

Highlights

Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.

• Increase your approval chances - Having a Chase checking or savings account with a balance of at least $250 will increase your chances of getting approved for Chase Freedom Rise®
• Earn Cash Back - With Chase Freedom Rise®, you can establish credit while earning 1.5% cash back on all purchases. Cash Back rewards do not expire as long as your account is open and there is no minimum to redeem for cash back.
• Earn a $25 statement credit after signing up for automatic payments within the first three months of opening your account. With automatic payments, just pick a date and dollar amount to make sure your Credit Card gets paid on time.
• Credit Limit Increase - As a Freedom Rise® cardmember, you'll be evaluated for a credit line increase in as soon as 6 months. Your credit line is the maximum amount of money you can spend on your Freedom Rise® Card
• Free Credit Score - Track your credit score and learn how to build it with Chase Credit Journey.
• No Annual Fee - You won't have to pay an annual fee for all the great features that come with your Freedom Rise® Card.
• Member FDIC

Balance transfer fee

5% or $5 of each transfer, whichever is greater

Foreign transaction fee

3% of the amount of each transaction in U.S. dollars.

Pro tip: You can pair this card with a Chase bank account

Chase Total Checking®

With over 4,700 branches, Chase has the largest branch network in the U.S. plus access to more than 15,000 ATMs.

Chase Secure Banking℠

Bank from anywhere with access to more than 15,000 Chase ATMs, more than 4,700 Chase branches, the Chase Mobile^® app and Chase.com.

Other credit card offers to consider

Think about the credit limit, timing and bonus terms

If you find the right card and are ready to apply, keep these three additional factors in mind:

Credit limit

You may only have an estimate of your possible credit limit, but that can still help guide your decision. Issuers usually do not publish average credit limits, though third-party forums such as Reddit are full of cardholders discussing approvals and the limits they received.

Think about whether the likely credit limit fits what you need. If the average limit on the card you want is much lower than expected, it may not be the right choice.

Approval timeline

Not every card can be added to a digital wallet immediately. In some cases, you must wait for the physical card to arrive before activation and use. That matters if you need to buy something soon.

Some cards provide virtual card numbers as soon as you’re approved, allowing you to add the card to a mobile wallet and start spending right away.

Welcome bonus

Welcome bonuses can be highly valuable and often play a major role in deciding whether to apply. Pay close attention to the spending requirement and the time limit to earn the bonus. Estimate how much you would need to spend each month on average, and if that amount feels unrealistic, it may be better to choose a different card.

Some cards, including the Discover it® Secured Cash Back and its unsecured version, the Discover it® Cash Back, offer an automatic welcome bonus. With either card, Discover matches all cash back earned during the first year of card membership, with no cap on how much you can receive.

Good to Excellent 670–850

18.74% - 28.74% (Variable)

Earn Unlimited Cashback Match™ + $200

Terms apply.

Highlights

Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.

• Get a 0% intro APR for 15 months on purchases and balance transfers; balance transfer fee applies. Then 18.74% - 28.74% Standard Variable Purchase APR applies, based on credit worthiness
• INTRO OFFER: Receive a $200 statement credit when you spend $500 on purchases in your first 3 months of account opening
• UNLIMITED CASHBACK MATCH: Discover will automatically match all the cash back you've earned at the end of your first year! There's no minimum spending or maximum rewards. You could turn $150 cash back into $300. Click "Apply Now" to view important rates and disclosures
• Earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases
• Redeem cash back for any amount. No annual fee
• Terms and conditions apply

Balance Transaction Fee

3% for the first 15 months; 5% at a promotional APR that Capital One may offer to you at any other time

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