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I Picked the Wrong Credit Card – Now What?

July 30, 2014
Credit Cards
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You’ve just received your new credit card in the mail, with a nice fat credit line. Maybe you picked a credit card that gives you cash back, or picked a credit card that racks up miles, or picked a credit card that offers a 0% introductory rate. But after using it for a few weeks or months, you realize you’ve made a horrible mistake. The card just isn’t panning out.

Broad solutions if you picked the wrong credit card

Fixing this mistake will depend on what exactly went wrong and what your credit looks like. You want to avoid just canceling the card outright. That’s because your credit score is partially dependent on how long your accounts are in good standing. If you have an account you are performing on, it helps your credit score. If you cancel that account, you are shooting yourself in the foot. Thus, it helps if you can decide quickly if you picked a credit card that isn’t right for you.

The other reason not to cancel a card if you can avoid doing so is that you’ve been granted credit. You never know when you may need it. If the annual fee isn’t too hefty, keep it in the drawer for emergencies.

Another broad piece of advice is to just apply for a card that you think might be better for you. If your credit score is good, and you spend responsibly, then get some more credit. Nobody says you have to use it. If you had that wrong card for just a few weeks, get a new card and cancel the old one out if you don’t want to carry too much credit. Just remember that if you do use credit responsibly, having a lower credit utilization rate — the ratio of your credit card debt to your credit limit — also helps your credit score.

Now, if you picked a credit card that isn’t working out, your other options depend on exactly what doesn’t work for you.

MORE>> How to Pick the Best Credit Card for You: 4 Easy Steps

Cash-back problems

A lot of cards offer higher tiers of cash back if you spend on certain categories. Some cards rotate through different categories every three months. Perhaps you thought you would spend more on certain categories than you actually are, and aren’t seeing a cash return yield as high as you’d like.

Call the credit card company and ask about other cash-back cards. Most of the major banks have several versions. The underwriting isn’t very different among these cards, so — provided your account is in good standing — they will likely take you through their other options and permit you to switch. Just be aware that annual fees, interest rates and other terms may differ, so you’ll have to weigh those options with these variables in mind.

Miles/points problems

This one has been plaguing a lot of cardholders the past few years, as airlines and hotels have devalued their rewards programs, sometimes without warning. I remember the days I could get a roundtrip transcontinental upgrade on United for only 20,000 miles. Today, it depends on many different factors and requires more miles.

Perhaps you find your chosen airline has pulled this stunt on you, and you don’t want to spend your money on devalued frequent-flyer miles. Once again, call your credit card company. Because the card is a brand partner, they won’t be able to swap out one airline for another. However, they may have other options under the same branding partner that you may like better. There may be cards that offer bonuses or hefty annual spends, or extra miles for certain purchases. Alternatively, you may be able to downgrade to a card that doesn’t earn much of anything, but eliminates the annual fee.

Low APR problems

It isn’t likely you’ll be unhappy with a low intro APR card, unless you find a better deal somewhere else. In that case, you can try to talk your credit card company into matching that deal, but these days there’s not much incentive to accede to your request. The credit card is already earning very little off of you, why decrease that revenue stream?

In this case, if your credit is good and you find a better deal, you may want to just apply for that one.

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