Credit cards are a useful tool for managing purchases, building credit, and reaping rewards point, cash back, or travel points. Unfortunately, the terms of credit cards change regularly, and a card which once had a great rewards program might not be as enticing as it once was.
Every year, it’s a good idea to compare cards and ditch certain ones in the bunch. While you are busy preparing for spring cleaning around your house, take the time to do the same for your finances — including your credit cards.
1. Do the math
If you’re enjoying the perks or credit card rewards from using a certain card, but it’s costing you more in fees than the rewards are worth, it’s probably time to rethink using that card. Perks and rewards like travel miles always come at some cost, but if the same benefits can be had for less through other programs, ditch the card.
2. Change in credit score
When someone’s credit score drops, it’s entirely possible that a bank may change the terms of a credit card issued to them. The result is usually higher interest and annual fees. However, an uptick in one’s credit rating isn’t going to prompt the bank to upgrade the card.
If you’ve had a credit card for a long time and your credit score has improved, you may be eligible for a better offer, but you have to ask. Call the issuing bank and ask if you qualify for any better programs, or check to see if other companies have better deals.
3. New offers
New credit card offers might be available that offer similar features and benefits to cards you currently carry, but may have a great introductory offer, like a low rate on balance transfers, bonus miles, or some other program to sweeten the deal. If you’re planning on going after another card, be sure to call your current bank to see if they’ll offer any incentives to keep you as a customer.
4. Changes in airline miles
With airline mergers and a difficult market, many of the airline miles rewards programs have changed. Many customers are unhappy about changes to Delta’s mileage rewards programs and are looking for other travel bonus alternatives.
Or, maybe you aren’t flying as much and rewards based on frequent flyer mileage points aren’t as interesting as cash back or shopping discount programs. If making it into a higher rewards status category with an airline mileage program isn’t realistic this year, it might be time to rethink any credit cards you’re carrying which offer miles.
Likewise, hanging on to a credit card you’re unlikely to use isn’t a great idea, since the company will eventually close an account with no activity, and paying annual fees for a card collecting dust isn’t a wise use of money or a credit line, either.
It’s important to remember that every time you apply for a new credit card, that information is calculated into your credit score. Too many inquiries into one’s credit history in a short period of time can have a negative effect on your credit rating, so choose carefully and don’t apply for every offer you find.
Also, if you do end up closing certain cards, be sure to read this article about the Pros and Cons of Canceling vs. Cutting Up Your Credit Cards.
Even if you convert a credit card into another one through an existing relationship with a bank, you might get a ping on your credit report. If you know what your credit score is before applying for a card, you can call in and ask about what the minimum score, income and other factors required to get into a different program before actually submitting the application.