How can you tell when your credit card should be replaced? It would be nice if a credit card simply dissolved when it no longer meets your needs, but unfortunately, the signs are a bit more subtle. Consider the following indications that it is time for a change in your credit card relationship.
1. You Have Had Your Card for a Long Time – Economic conditions may have changed since you acquired your card. If the card is ten years old or greater, the odds are good that your interest rate is no longer competitive. You may also have an annual fee when there are equivalent cards available now without the annual expense. Consider shopping around for a new card, even if it is with the same issuer. You may be able to leverage multiple offers into a better deal with your existing card issuer.
If you do decide to close an older account, keep in mind that removing a card with a high credit limit and an excellent payment history will cause a dip in your credit score, as you now have less credit available and a shorter history from which to assess risk.
2. You Have Poor Rewards or No Rewards – Rewards programs have expanded over time, allowing you to pick a card with a rewards program that best fits your needs. As an example of broad-based rewards, consider the Barclaycard CashForward World Master Card — which gives you 1.5% cash rewards on all purchases, 5% redemption bonus to apply to your next rewards redemption, and $100 cash bonus with $500 in qualifying purchases within the first ninety days.
Other cards may focus on specific vendors such as airlines and hotel chains for their rewards, making them perfect for travelers loyal to a particular group. The point is that rewards are everywhere now, and you owe it to yourself to find the best one for you.
3. A Major Purchase Is in Your Future – If you pay off your bills each month and don't care about the interest rate, but will be adding large purchases to your account in the near future, consider finding a card that provides a maximum sign-up bonus and rewards combination, yet still meets your other basic credit needs.
Sign-up bonuses can be doubled or tripled if you are willing to take that bonus in non-cash equivalents such as airline miles or hotel redemptions — but make sure you understand the redemption rules and limitations thoroughly before you sign up. In addition, make sure that you verify which purchases qualify against a signup bonus.
4. Your Life Situation Has Changed – As you built up a solid credit history, your credit score may have improved over time to the point that you qualify for a much better deal than the one you have now. Shop around to take advantage of your improved score. You can track your credit scores for free and read your credit report within minutes using Credit Manager by MoneyTips.
On the other hand, your debts may have increased to the point where you should consider shifting to a 0% introductory balance transfer card to allow you to attack the principal on your debt. In that case, you may want to look at a card such as the Citi® Double Cash Back Card that combines a 0% introductory APR for eighteen months while allowing an effective 2% cash back — 1% at purchase and another 1% upon payment.
5. Unresponsive Behavior – Over time, relationships can become stale and things are taken for granted. Is your credit card company taking you for granted as well? If you find that your card issuer's customer service, rewards programs, or other day-to-day operations is deteriorating over time, it may be time to look for a new card.
At the very least, you should communicate your dissatisfaction with your current card company. They may counter with a suitable offer that entices you to stay.
Keep these tips in mind as you evaluate your current credit card — and should you find that your credit card does dissolve in your wallet, consider it a sign to shop for a new one!