If your current credit card isn’t doing it for you these days, you may be considering a new card. But with all the different credit card options out there, it can be hard to figure out how to choose your next piece of plastic. Don’t worry, the Nerds are here to help! Here’s what you need to consider when you’re looking for a new everyday credit card.
How do I choose a new card?
Provided you use your credit card responsibly, it can be a great tool that gets you cash or travel rewards, a short term interest-free loan and protection perks. So when you’re looking for a new card, you’ll need to consider the benefits and features that are most important to you. Here are a few questions you should ask yourself:
- Why do I use a credit card? In other words, is your primary motivation earning rewards, getting an interest-free loan for a month or adding an extra warranty to your purchases? Whatever it is, make sure your new card has the perk you most desire.
- How high is my credit score? There are credit cards for people with fair credit, but an excellent credit score will likely give you access to a larger range of cards. If a card specifically requires a high score, and yours isn’t quite there yet, you probably don’t want to waste the hard pull on an application for that card.
- Why am I getting rid of my old card? Think about why you want to get rid of your old credit card. What perks are missing? Are you tired of dealing with the customer service representatives employed by your issuer? Make sure your new card doesn’t have the same downfalls as your old card — you don’t want to make a habit of applying for too many new cards at once.
- What am I spending my money on? Different cards may give you higher rewards for certain categories of spending — like travel, gas or dining out. If you spend most of your money on one or more of these categories, it’s a good idea to find a credit card that gives you extra points or miles for these purchases. But don’t forget to consider issuer-imposed spending caps.
- Do I prefer cash or travel rewards? If you’re getting a rewards credit card, the two main redemption options are cash and travel. If you don’t remember the last time you flew or stayed in a hotel, you’ll probably want to go the cash rewards route. But if you’re a regular globetrotter, you can generally redeem travel rewards at higher values than cash redemption.
- What extras do I need? If you frequently travel overseas, you’ll want a card with no foreign transaction fees and an EMV chip. If you shop a lot, you’ll want price and purchase protection. Think about the extras most important to you, and make sure your new card includes them.
And remember, don’t cancel your old credit card!
Part of your credit score is determined by the average age of your credit accounts. Closing old accounts will decrease this age, and may hurt your score in the process. There may be an exception if the card has an annual fee and you don’t think you’ll use it enough to reap rewards higher than that fee. Weigh the potential upsides (like getting rid of the fee) against the potential downsides (like hurting your credit) before your cancel your old card.
Bottom line: When you’re ready to get a new credit card, it’s important to choose the best card for your spending habits and perk preferences. Ask yourself the questions outlined above to determine what you should be looking for in your next card. Also, keep your old credit card unless you have a good reason to close it — like a high annual fee — in order to avoid dragging down your average age of credit accounts.
Woman holding new credit card image via Shutterstock