Credit cards can offer a wealth of benefits. Cash back. Travel rewards. They may even include hidden perks like mobile phone insurance and wine tastings.
Which means if you’re not making the most of the earnings available through your credit card, it may be time to try something new.
It’s a good idea to review your credit card usage every once in a while to ensure your spending is being rewarded. Perhaps your shopping habits have changed and the rewards your card offers no longer benefit you. Or maybe the annual fee outweighs any perks you would receive.
Use the checklist below to determine whether or not it’s time for you to consider applying for a new credit card.
1. Your APR is Too High
In a perfect world, credit card debt would not exist. Unfortunately, no one is perfect and most of us will carry a balance on our card and pay interest once in a while (although we strongly encourage you to pay off your credit card bill in full each month).
In instances when you simply cannot pay your balance in full, pay attention to your APR. Is your rate particularly high? How much interest are you accruing each month? Depending on your card’s APR, it may be time to consider an alternative. See our picks for the best low-interest credit cards for some options.
You could also consider a credit card balance transfer to help you pay down your debt. This is when you move your balance from one card onto a new card with a lower rate (some cards offer an introductory 0% interest rate). Check out our votes for best balance transfer credit cards to see if any would work for you.
Read more: How do credit card balance transfers work?
2. You’re Not Earning Rewards
There are an extraordinary number of credit cards that provide 1% cash back on your spending. Some even offer five times the earnings in specific categories, such as the Chase Freedom Flex℠ or the Discover it® Cash Back credit card.
If your current credit card doesn’t offer points or cash back, it’s time to apply for something different. Spend some time evaluating your spending to determine which credit cards might reward your current habits.
Read more: Best cash back credit cards
3. Your Spending Habits have Changed
Even if your current credit card has an attractive rewards program, perhaps it no longer benefits your unique spending tendencies.
Maybe you started with a student credit card in college to build your credit history. Or perhaps your credit card rewards you for travel-related purchases with perks such as airline tickets or hotel stays, but you don’t travel often anymore.
If your credit card isn’t a great match for your current spending patterns, now is the time to research some other options and apply for another credit card.
Read more: Best Travel Rewards Credit Cards
4. Your Annual Fee Cancels Out Your Benefits
Not every credit card requires an annual fee, so if your current card does, it’s worthwhile to calculate your earnings each year and determine whether or not your annual fee outweighs your benefits.
For example, the American Express® Gold Card comes with a host of attractive rewards, including 4x points at restaurants worldwide and U.S. supermarkets, as well as 3x points on flights. However, the card also comes with a hefty annual fee of $250. Points rewards are great, but consider the cost you’re paying upfront to earn it.
Read more: Is an Annual Fee Credit Card Ever Worth it?
5. You’re Not Claiming Your Rewards
Some credit cards offer excellent rewards, but the steps cardholders must take to redeem those perks are so complex that you never take advantage of them.
For example, the Citi Premier® Card has a competitive sign-up bonus of 60,000 points when you spend $4,000 in the first three months of account opening, and you can earn 3% back on purchases at supermarkets, gas stations, restaurants, and more. But, here’s the catch: if you’re not traveling much and don’t plan to use your points for flights or hotels, then you likely won’t get outsized value from your points and will have to redeem for cash back, merchandise or redeem (at a basic one cent per point) towards any travel purchase through thankyou.com.
If you’re not making the most of the rewards offered through your current credit card, maybe it’s time to switch things up and apply for something new.
Read more: Best rewards credit cards – get more bang for your buck
6. When There’s a Special Sign-Up Bonus
Many credit cards offer some sort of intro bonus, often worth hundreds of dollars, to incentivize new customers to apply. While this alone may not be enough to warrant applying for a new card, it could be a wise decision if you have a large upcoming expense.
To receive a credit card sign-up bonus, new cardholders typically must meet a specific spending goal within the first few months of their account opening. If you’re already anticipating a large purchase in the near future, consider making it on a new card, so you can earn some money back.
Check out our regularly updated list of the best credit card sign-up bonuses to see what suits your needs.
When You Shouldn’t Apply for a New Credit Card
1. When You’re Also Applying for a Large Loan
Every time you submit an application for a new credit card, your credit score dips a little. For this reason, if you plan on seeking financing in the near future, avoid applying for a new card just yet, since it could affect the interest rate your lender offers.
Additionally, try not to apply for a credit card after seeking a large loan, since lenders may interpret your consecutive applications for more money as a red flag.
Read more: What Credit Score do You Need to Get Approved for a Credit Card?
2. After Losing a Job
When you’re applying for a new credit card, odds are you’ll be asked to provide information on your income level.
Consequently, if you’ve recently lost a job, it may prevent your credit card application from being approved. Instead, focus your time and energy on finding a new job before you seek out a new credit card.
3. Before Doing Your Research
If you think it’s time to apply for a new credit card, there’s a wide variety of excellent choices available. Nevertheless, not every credit card will be well-suited to your spending habits, and applying for multiple cards at once can actually hurt your credit score.
Before you decide which card you’d like, be sure to research options at length, so you can choose a new credit card wisely.
Even if your credit card matched your needs when you first got it, it may not be the best fit for your spending habits today. Your card should be rewarding you for your purchases. You should be earning perks and points rather than losing money each month on interest or yearly through a large annual fee.
Take some time to review your spending habits and the benefits your credit card is (or isn’t) offering you. If you discover that your card isn’t rewarding your purchases, it’s likely time to apply for an alternative.
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