Like your old high school friend on Facebook who still has a mullet, some people have a hard time letting go.
Garages throughout America are filled with boxes of junk that will never get used, but we can’t bring ourselves to throw out, and we tend to handle our credit cards the same way. In fact, 25 million Americans have used the same primary credit card for more than 10 years and another 20 percent have never changed their preferred card, according to a survey from CreditCards.com. Sure, there’s a passionate subset of Americans who obsess over new card offers and pounce on every new sign-up bonus, but most folks don’t. We just have better things to do than worry about credit cards.
That’s certainly understandable. The truth, however, is that if you haven’t changed credit cards in the past five to 10 years, there’s a good chance the one you’re using now isn’t right for you. That may be costing you money.
Here are a few signs that your old credit card — like your high school letterman’s jacket — just isn’t a fit for you anymore.
[See: 8 Ways to Maximize Your Credit Card Rewards.]
It’s the only card you ever had. This is fine if you’re in your early 20s, when your financial situation isn’t too different than it was when you graduated college. However, if you’re 30 or older, that first credit card probably doesn’t do you justice anymore. It is likely time to graduate to a credit card with a better annual percentage rate, more lucrative rewards and a higher credit limit.
You just had a baby. First-time parents have absolutely no idea how much their lives are going to change when their little bundle of joy arrives. While you may firmly believe you and your spouse are going to keep eating at fancy restaurants regularly and traveling the world with your little one in tow, the truth is you probably won’t — at least for a while. As your life’s priorities change, so should your credit card. If you’ve been chasing miles and points and sign-up bonuses, consider a cash-back credit card that rewards you for shopping at grocery stores or department stores. It’s certainly not as sexy as saving for a trip to Croatia, but getting extra cash back for all those diapers can have a real impact on your budget.
You no longer have crummy credit. Bad credit costs a fortune in the form of high interest rates on mortgages, auto loans and credit cards. Cards targeted to folks with bad credit have APRs of 24 percent or higher — even up to around 30 percent — and often come with additional fees. They also tend to have less lucrative rewards than other credit cards. Once you’ve rebuilt your credit, it’s time to cash in on lower APRs, card protections and perks. If you feel confident you won’t be tempted by the lure of additional credit, get yourself a new card and let it work for you.
[See: 10 Completely Careless Credit Card Mistakes You’re Making.]
It is a retail credit card. Many people get their first credit card from a retailer. That’s because those cards are easier to qualify for than other types of credit cards and often come with the promise of a big discount on a purchase. The problem is that those cards can have APRs near 30 percent and typically can’t match the rewards you can get from a general-purpose card. While you might still love that retailer, your best move is to find another card with a better interest rate and better rewards.
You travel internationally and your card charges foreign transaction fees. Traveling overseas is expensive, and the last thing you want to do is make it even pricier. Using a card that charges foreign transaction fees does just that. You’ll pay an extra 2 or 3 percent on top of everything you buy while you’re out of the country — simply because you’re out of the country. Thankfully, you can now find dozens of cards that have eliminated those fees.
You’ve recently started carrying a balance and your card has a high APR. Millions of Americans are one emergency away from real financial trouble. If life throws you a curveball, and you’re no longer able to pay your credit card in full at the end of every month, that APR you never had to care about suddenly becomes an incredibly important number. Consider calling your credit card issuer to ask the company to reduce it (you’d be amazed how often that works) or get yourself a new card with a lower interest rate. There are cards offering zero percent interest rates for as long as 21 months for balance transfers. You’ll likely pay a one-time fee of 3 to 5 percent of the transaction to transfer the balance, but that is a small price to buy yourself nearly two interest-free years when times get tough.
[See: 10 Easy Ways to Pay Off Debt.]
The bottom line: As life changes, so do our needs. The same credit card you had in college probably isn’t right when you’re 30. That card you had before you started a family just might not be perfect for you once little Aidan and Olivia arrive. If you haven’t shopped for a new card in years, consider doing so now. Rewards are more lucrative and zero percent offers are more generous than ever.
When you do get a new card, your best move is probably to keep your old credit card account open — especially if it is your only card. The longer you hold on to a card with a positive history, the better it is for your credit. You can either stuff it in a desk drawer and stop using it, or you can put small, recurring charges — say, a Netflix subscription or gym membership — on the card, just to keep the account active. (One caveat: If your old card charges an annual fee, consider closing it. There’s no point in continuing to pay a $75 annual fee for a card you’re barely going to use.) Know that your good payment history of a closed card stays on your credit reports for 10 years. To keep your score high when you lose a credit line after closing a card, keep your balances on your other cards low or near zero.
Of course, if you’re uncomfortable with taking on another card for whatever reason, stick with your old card. While the right card used the right way can bring great opportunity and reward, the wrong card used carelessly can cause big problems.
More from U.S. News
What to Do If You’ve Fallen (Way) Behind on Your Credit Card Payments
Basic Money Lessons You (Probably) Missed in High School
5 Ways to Give Your Credit Score a Quick Boost
6 Signs That You’ve Got the Wrong Credit Card for You originally appeared on usnews.com
