Credit cards can offer many benefits. Cash back. Travel Rewards. They may even include hidden perks such as mobile phone insurance and wine tasting.
This means that if you’re not making the most of the income available with your credit card, it might be time to try something new.
It’s a good idea to check your credit card usage from time to time to make sure your spending is being rewarded. Perhaps your shopping habits have changed and the bonuses offered by your card no longer benefit you. Or maybe the annual fee outweighs any perks you might get.
Use the checklist below to determine if it’s time for you to consider applying for a new credit card.
1. Your annual income is too high.
In an ideal world, credit card debt would not exist. Unfortunately, no one is perfect, and most of us have card balances and interest payments from time to time (although we strongly encourage you to pay your credit card bill in full each month).
In cases where you simply cannot pay off your balance in full, look at your APR. Is your rate particularly high? How much interest do you charge each month? Depending on your card’s APR, it might be time to consider an alternative. Check out our selection of the best low interest credit cards for some options.
You may also want to consider transferring your credit card balance to help you pay off your debt. This is when you transfer your balance from one card to a new card with a lower rate (some cards offer an initial interest rate of 0%). Check out our votes for the best balance transfer credit cards to see if they’re right for you.
Read more: How do credit card balance transfers work?
2. You don’t get rewards
There are an incredible number of credit cards that provide 1% cash back on your spending. Some even offer 5x earnings in certain categories, such as the Chase Freedom Flex℠ or the Discover it® Cash Back credit card.
If your current credit card doesn’t offer points or cashback, it’s time to apply for something else. Take some time to evaluate your spending to determine which credit cards can reward your current habits.
Read more: The best cashback credit cards
3. Your shopping habits have changed
Even if your current credit card has an attractive rewards program, it may no longer benefit your unique spending habits.
Maybe you started with a college student credit card to build your credit history. Or maybe your credit card rewards you for travel-related purchases with perks like flights or hotel stays, but you don’t travel often anymore.
If your credit card is not suitable for your current expenses, now is the time to explore other options and apply for another credit card.
Read more: Top Travel Rewards Credit Cards
4. Your annual fee will void your benefits.
Not every credit card requires an annual fee, so if your current card does, it’s worth checking your income each year and determining if your annual fee outweighs your benefits.
For example, the American Express® Gold Card offers many compelling rewards, including 4x points at restaurants worldwide and US supermarkets, and 3x points on flights. However, the card also comes with a hefty $250 annual fee. Point rewards are great, but think about how much you pay upfront to earn them.
Read more: Is an annual credit card ever worth it?
5. You don’t collect your rewards.
Some credit cards offer great rewards, but the steps that cardholders have to take to use these benefits are so complicated that you’ll never use them.
For example, the Citi Premier® card has a competitive signup bonus of 60,000 points if you spend $4,000 in the first three months of opening an account, and you can get 3% back on purchases at supermarkets, gas stations, restaurants, etc. . . But here’s the catch: if you don’t travel much and don’t plan to spend your points on flights or hotels, then you probably won’t get too much value out of your points and you’ll have to exchange them for cashback, goods or services. use (at the rate of one cent per point) on any travel purchase on thankyou.com.
If you’re not making the most of the rewards offered with your current credit card, it might be time to turn things around and apply for something new.
Read more: Better Rewards Credit Cards – Get more bang for your buck
6. When there is a special signup bonus
Many credit cards offer some sort of welcome bonus, often worth hundreds of dollars, to encourage new customers to apply. While this alone may not be enough to apply for a new card, it may be a wise decision if you have large upcoming expenses.
In order to receive a credit card sign up bonus, new cardholders usually need to reach a certain spending goal within the first few months of opening their account. If you’re already expecting a big purchase in the near future, consider making it with a new card so you can get some of the money back.
Check out our regularly updated list of the best credit card signup bonuses to see what suits your needs.
When you Should not Apply for a new credit card
1. When you are also applying for a large loan
Every time you apply for a new credit card, your credit score goes down a bit. For this reason, if you plan to seek funding in the near future, do not apply for a new card just yet, as this may affect the interest rate your lender offers.
Also, try not to apply for a credit card after looking for a large loan because lenders may interpret your successive requests for more money as a red flag.
Read more: What credit score do you need to get approved for a credit card?
2. After losing your job
When you apply for a new credit card, you will likely be asked to provide information about your income level.
Therefore, if you have recently lost your job, it may prevent your credit card application from being approved. Instead, focus your time and energy on finding a new job before looking for a new credit card.
3. Before starting the study
If you think it’s time to apply for a new credit card, there are a wide variety of great options out there. However, not every credit card will be a good fit for your spending habits, and applying for multiple cards at the same time can hurt your credit score.
Before you decide which card you want, be sure to research your options in detail so you can choose a new credit card wisely.
Even if your credit card fit your needs when you first got it, it may not fit your spending habits today. Your card should reward you for your purchases. You should be earning perks and points, not losing money every month in interest or yearly due to high annual fees.
Take some time to review your spending habits and the benefits your credit card offers (or doesn’t offer). If you find that your card isn’t rewarding your purchases, it’s probably time to apply for an alternative.
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