4 Signs You Should Switch to a New Credit Card
Credit card issuers are constantly rolling out new credit cards with attractive rewards programs. Yet millions of consumers never switch credit cards. If you’ve loyal to the same credit card for several years, you could be leaving hundreds of dollars in rewards and other valuable benefits on the table. Here are a few signs it’s time to switch to a new credit card.
You’re not earning rewards on all your purchases.
Many credit cards pay higher rewards on some categories of purchases, but even these credit cards pay a base rate of rewards on all other purchases. If your credit card doesn’t offer rewards on all purchases, it may be time to switch to a card that does. Even if you’re earning just 1% rewards on all your purchases, it’s better than earning no rewards at all.
Your interest rate is high – but you have good credit.
Your credit score directly impacts your interest rate. If you opened your credit card back when you had a mediocre credit score, you may be stuck with a higher interest rate for as long as you have that credit card. Paying your balance in full each month lets you avoid expensive finance charges. However, any time you carry a balance, you’ll pay the price of that higher interest rate. Once your credit score improves, it’s time to switch to a card with a lower interest rate. That way you’ll save on interest charges whenever you carry a balance.
You can’t get a higher credit limit.
Some credit cards have their own maximum credit limit. Once your credit limit reaches that max, that’s the highest your limit will ever be. With credit cards like this, you won’t get a higher limit regardless of your income or your credit habits. If you’re a good credit card customer, but can’t get approved for a credit limit increase, a new credit card may be the best move.
You’re paying an annual fee with no extra benefits.
There are times that paying an annual fee is worth it. Paying an annual fee on a secured credit card to improve your credit may be necessary to improve your credit score. Or, paying an annual fee on a rewards credit card makes sense if your rewards offset the annual fee. However, if the credit card isn’t bringing more value than the annual fee, you’re better off getting another credit card – one without the additional fee.
Should You Make the Switch?
If you’ve been using the same credit card for several years, chances are there are better credit cards out there. Someone with good credit and high income can typically have their pick of credit cards.
You don’t have to close your old credit card, especially if you’re worried about the potential impact to your credit. Simply pay off the old balance and use your credit card periodically for small purchases to keep it active. Then, use your new credit card to take advantage of better rewards and perks.