Breaking up is hard to do. Credit cards are a lot like relationships. It’s not always easy, but sometimes it makes sense to break up with your credit card. If you haven’t used your credit card in months and it’s collecting dust in your dresser drawer, clearly you’re not the match you once were. Perhaps it’s time to make a change? At one time you may have been the perfect match, but people, and cards, change. You may not be compatible anymore (or you may not have been compatible to begin with). Here are some good reasons to consider breaking up with your credit card.
1. Low Rewards
Credit cards are so much more than just a way to manage short-term cash flow. If you’re looking to get the most out of your credit card, you’ll want a rewards program that rewards you for your loyalty. While some rewards programs are generous, others aren’t. If you’re not getting rewarded for your loyalty, it’s probably time to look elsewhere.
2. High Fees
Are you sick of being nickel and dimed by your credit card company? You’re not alone. While most credit card companies charge fees for everything from cash advances to paper statements, if yours is charging you an arm and a leg compared to the competition, it may be time to end your relationship. Side note: If you’re managing your short-term cash flow properly and using your credit card responsibly, you shouldn’t have to incur fees for most of these services anyway.
3. Low Credit Limit
If you’ve been diligently working to boost your income and increase your credit score over the years, but your credit card company isn’t showing you some love in return, it may be time to break up. Your credit card company should reward you for your loyalty and hard work, and not give you a hard time about increasing your credit limit if you request it. Some credit cards have a hard cap on your credit limit, so if your limit isn’t enough, it’s may be best to part ways.
4. Major Life Change
Annual fee, or premium credit cards, usually only make sense if you spend a lot on your credit card. The math is simple – the reward points earned from your card have to be enough to outweigh your annual fee. This can usually be accomplished by combining all of your family’s spending onto one credit card.
What may have worked for your family, may not work for you alone. If there’s a major life change, for example, you get separated or divorced – you may find you’re not spending enough to justify the annual fee. Similar to your marriage, it may be time to go your separate ways with your credit card and switch to a no-fee credit card.
The Bottom Line
These are just four of the many reasons why it may be time part ways with what was once your favourite credit card. Remember, cutting up your credit card doesn’t cancel it. You’ll need to contact your credit card company and clear up any outstanding balances. In our next post we’ll look at some other good reasons it may make sense to break up.