Five Times You Should Change Your Credit Card
If your credit cards are cracking, peeling, and collecting dust, then it’s probably safe to say it’s time for an upgrade. But how else can you know when it’s time to buy a new credit card? There is a good chance that the old card no longer suits you.
If you’re not sure if it’s time to look for a new card, here are the two main questions you should be asking yourself and how to find the best new card for your lifestyle.
Can you afford the annual fee?
If you find that you can no longer afford the annual fee, then your path forward is clear: replace the card or ask to upgrade to the free version.
In general, you do not want to cancel the card. Even an unused credit card with a zero balance will report positive information to the credit bureau every month, and card cancellation will deal a direct blow to your credit score.
Now, if you can afford the card’s annual fee, you need to look at some other factors to determine if the card adds value to your life. A credit card may have made sense for your lifestyle when you opened it, but now years have passed and the perks that matter most to you have changed. To gauge if your card is still a perfect fit, here are a few signs that it’s time to replace your credit card.
Interest rate is too high
While many of us don’t keep track of credit card interest rates, these numbers remain at all-time highs these days . Ideally, you won’t be charged any interest, because ideally you don’t carry over the balance from month to month. But if you’re in the process of paying off your credit card debt, your card’s interest rate has a huge impact. Look for a card with the lowest possible interest rate. The easiest way to lower your credit card interest rate? Just ask .
You do not earn (or use) rewards
If you use your card regularly and always pay your balance in full, there is no reason why you should not have a bonus card. There’s no shortage of rewards programs, even if you hesitate – Discover , for example, offers a secure credit card that still offers rewards.
If you are rewarded, look at what you spend the most money on and find a credit card that matches your habits. Those who spend a lot on gas and groceries should look for a cash card, while frequent fliers should get a travel bonus card .
Here’s our guide to maximizing your cashback bonus categories .
Annual fee increased
This brings us back to our original question: Can you afford the annual fee and is it worth it? Reasons for paying an annual fee: If you are only eligible for cards that require it, or if your rewards (see above) justify the annual fee. If none of these options work for you, replace your current card with a card that has no annual fees.
Your credit has improved
Finally, as your credit improves, your card should improve with it. Perhaps your score has risen enough to upgrade your card with better terms than the ones you started with. Call a representative and ask about lowering your annual fee, lowering your interest rate, and possibly adding better rewards.
Of course, to really appreciate your card’s role in your wallet, you need to understand the basics of a credit card statement . With a little research (and a thorough analysis of your credit card habits), you’ll find a card with benefits that better suits your lifestyle. Shop around for the best credit cards for you with lists of the best on sites like credit cards. Explanation here .