How to Know if You're Using the Wrong Credit Card

Stephanie Miller
November 10, 2017
Using Wrong Credit Card

If there’s one thing that we as humans are pretty good at, it’s becoming complacent. We get comfortable in our jobs, in that well-worn sweatshirt from college, and even with our credit cards. We find ourselves a good thing, and don’t really see any reason to change. There are a few reasons you may want to force yourself out of that comfort zone and into something new, though, particularly when it comes to your credit cards. Here are a few signs that you might be carrying the wrong credit card for you, and it’s probably time for a change.

It Was Your First Card

Ah, your very first card. You were so excited to get that “You’re Approved!” message. If you were like me, you even checked the mail every day for two weeks, eagerly awaiting its arrival in your mailbox.

The credit limit was probably low – though it’s been increased over the years – but you didn’t care. You had plastic. Fast forward to present-day. While that first credit card may have been an excellent starter, it’s probably not offering you what you need, or even what you deserve. And that means it’s time for a change.

Credit cards marketed to new cardholders – particularly college students – are typically simple, no-frills products. Many of them have less-than-ideal interest rates, don’t offer cash back rewards, and may even charge an annual fee.

It’s time to take a look at the options available to you now. You’ve likely built up a notable credit history in the years since you were approved for that first card, which means that the door to a number of other (better) credit cards is open.

Decide if you want to start earning great cash back rewards or miles on the things you buy anyway, if you want a card that offers excellent annual benefits, or even one that doesn’t charge an annual fee. Plus, in the process of getting a new account, you’ll probably gain a higher credit limit.

You’ve Improved Your Credit

The credit card account that you opened years ago may have been the best one at the time, simply because you couldn’t get approved for anything better. Of course, time has passed since then. It’s possible that you’ve improved upon your credit or built a substantial history, and negative reports may have even fallen off of your report over that period.

If that’s the case, it’s time to start shopping around. Get your free annual credit report, check your free FICO credit score, and see how your creditworthiness measures up now. Then, enter your credit score on this site to see the credit products for which you’re likely to be approved.

You may be able to get a much better credit card now than you were able to acquire before, all because you’ve made improvements to your credit score. Talk about a double win!

It’s Costing You Money

One surefire way of knowing that you have the wrong credit card for you is if it’s costing you money each year. No, I don’t mean that if you’re paying an annual fee, you need to get rid of the card. However, if you are paying an annual fee and not earning enough in benefits, cash back rewards, or other perks to make up for that fee, your credit card is actually costing you money. And that’s not smart.

Sit down and calculate how much you’re spending on the card each year. If you’re paying an annual fee and not earning any rewards, it’s probably time to ditch the card (unless you have some really compelling reason not to). If you’re earning rewards, but not enough to cover the annual fee, see if there’s another credit card product that better suits your spending patterns.

There’s nothing wrong with paying an annual fee on a card, if the benefits are great. Just make sure that you’re not paying money each year just to carry that plastic in your wallet.

Life Looks Different Now

Once upon a time, you might have been a jetsetter with enough frequent flier miles to make a stewardess jealous. You picked a great credit card that earned you excellent miles, offered free checked bags, and even waived foreign transaction fees. But times have changed, and it’s likely that so has your lifestyle.

Maybe you’ve taken on a new job that doesn’t require (or allow) you to travel so much. Maybe you settled down, had children, and your current expenses are more related to baby wipes than five-star hotels. If that’s the case, then you’re probably selling yourself short by continuing to use your old credit card.

Take a look at your lifestyle and your expenses. Would you be better served with a credit card that offers up to 6% back on groceries, rather than one that gives you free Global Entry and upgraded rental cars? Would you be better off earning cash back rewards rather than miles?

If so, it’s time to shop around for a new credit card.

You’re Paying Too Much in Interest

When you first got your current credit card, perhaps you paid the balance off in full each month. That way, you didn’t have to worry about interest rates – you just avoided them altogether.

Well, if times have changed and now, for whatever reason, you are carrying a balance, you may soon discover that the card product that worked for you then is now costing you an arm and a leg.

If you signed up for a credit card with a high interest rate and are only now realizing it – now that you are carrying a balance – it might be time to look for a new card. Keep your eyes peeled for one offering a 0% balance transfer option; this will allow you to pay your balance off sooner and without paying extra money in interest.

What to Do with the Old Card

If you’ve decided that a new credit card is the right choice, can certainly help find you the perfect product. But, what do you do with that old card? Simply close the account?

Not so fast.

If it’s the first card you ever had, closing the account will do a number to your average age of accounts, dropping your credit score immediately. Even if it’s not the oldest account on your credit report, closing a card account can impact your credit utilization and age of accounts, causing an often-significant dip in your score. There are a few reasons you may want to force yourself out of that comfort zone and into something new when it comes to your credit cards. Here are a few signs that you might be carrying the wrong credit card.

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