3 Signs You’re Using the Wrong Credit Card
As your needs change, a card that used to make sense can become a poor fit.
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With so many credit cards to choose from, you don’t need to stick with a card that no longer matches your lifestyle.
Look through your wallet once a year, or any time your circumstances change dramatically. Are you paying annual fees for cards you barely use? Have your spending or travel habits changed? Are you in debt? Has a new card become available that has compelling benefits?
Carrying the wrong credit card means missing out on money-saving opportunities, such as no-interest promotions or valuable bonuses and credits.
If you don’t use a card anymore, but you want to keep the account open, consider downgrading to a different card from the same issuer. This can be a good move if you want to ditch an annual fee, but still preserve your long credit history.
Your card is no match for your debt
Even if you have credit card debt on a rewards card, you may still be using that card because you want to earn those valuable points on purchases. According to a NerdWallet survey conducted online by The Harris Poll in October 2024, 21% of Americans had used a credit card to earn rewards in the previous 12 months despite having credit card debt.
However, depending on how much debt you have and the interest rate you’re paying, the cost of that debt can outweigh the value of your rewards in six months or less.
That means it’s better, mathematically speaking, to focus on debt repayment for now, and ignore credit card rewards until you’re in a more stable place financially. Look for ways to lower the interest rate you’re paying, such as a balance transfer credit card with a 0% APR promotion, or a personal loan with a lower interest rate.
Let’s say you’re paying 23% APR on a $5,000 balance, but you qualify for a balance transfer card with 0% interest for 18 months and a 3% balance transfer fee. You’ll pay a $150 balance transfer fee, but accounting for that cost, you’d still save $809 on interest if you pay off your balance in full before the no-interest period ends. That’s compared to paying off your debt with interest over the same 18 months on your original credit card.
The annual fee is the wrong size
Credit card annual fees can add up if you carry multiple cards, especially midtier or premium cards with fees of $150 or more.
This is not to say an annual fee is always a bad thing. Cards charging annual fees tend to offer more benefits, like higher welcome bonuses and rewards for purchases. Pricier travel cards often provide valuable extras like a credit toward TSA PreCheck or Global Entry, airport lounge access, free checked bags, hotel room upgrades and more. So if you’ve shied away from cards with annual fees, there might actually be some out there that provide meaningful value.
But if you truly don’t want to pay annual fees, there are no-fee cash-back and travel rewards cards to choose from.
The benefits are useless or nonexistent
When you were newer to using credit cards, you got what you could qualify for at the time: no annual fee and minimal rewards, if any. Now you have a well-established credit history that could make you eligible for more rewarding cards. Why settle for 1% cash back when you could be earning at least twice that much on every purchase?
If you’ve already upgraded to cards with more robust rewards, check in on those cards once in a while. Sometimes, a card’s perks no longer fit your spending habits or how you prefer to redeem rewards. How frequently you travel, how much effort you’re willing to put into managing your cards, and how you like to redeem rewards can all evolve over time.
Plus, credit card companies sometimes make major changes to their cards’ benefits. A card that didn’t capture your interest a few years ago may suddenly have a lot to offer.
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