Nearly a quarter of first-time homebuyers are opening new cards within six months of buying a home, according to a new study. The study by Realtor.com and Experian, which was released in May but looks at consumer behavior between 2020 and 2021, found that 24.4% of first-time buyers opened a new bank card within the first six months of buying a new home, compared to just 1% of current homeowners.
At the same time, 21.5% of first-time buyers opened a new retail card within the first six months of buying a new home. That could be bad timing for cash-strapped new homeowners, especially with recession warning lights flashing in financial and commodity markets. About 57% of these consumers also opened a new bank card within two months of closing on a new home. And on average, they opened about 1.55 cards in total.
“Piling on credit-card debt on top of taking on a mortgage can be a tricky thing, should disaster strike — maybe you lose your job, or an illness takes hold that puts a pause on your income. ”
Additionally, first-time buyers carry a higher balance of $300 more on their bank card than existing buyers and $455 more than renters, the report said, in the first month after buying a home. Why are people opening cards after closing in on their new dream home? “It is common to sign up for a new credit card soon after closing on a home,” Ted Rossman, senior industry analyst at Bankrate.com, told MarketWatch. One big reason is to use these large purchases to earn rewards, he said, from buying furniture to moving expenses to repairs. “When money is tight, as it probably is after buying a home, the ability to spread out payments with a 0% interest promotion is really compelling,” he added, such as with a credit card that allows for bank transfers without interest for 21 months. At the same time, piling on credit-card debt on top of taking on a mortgage can be a tricky thin …