Is It Time to Find a New Credit Card?

Jane Switzer
by Jane Switzer December 20, 2016 / No Comments

When it comes to credit cards, Canucks are a curious yet loyal bunch.

Canadians searched for credit card-related keywords nearly one million times every month this year, according to RateHub’s 2016 Digital Money Trends Report, with approximately two-thirds of respondents saying they carry a credit card from their primary bank.  

If you’ve had the same credit card for several years, it’s a good time to reevaluate your needs and compare credit cards to find out if you’re getting the best deal. Here are a few signs that it’s time to look for a new credit card:

Your credit score has improved

If you’re newly sprung from college or university and have built a positive credit history using your student credit card, it’s time to upgrade—some student cards expire after graduation anyway. If you’re employed and have a decent income, you can probably qualify for a card with a higher limit, lower interest rate, plus better features and rewards.

Bad credit (or no credit) limits your options, but if you’ve proven you can be responsible with a secured credit card, you can apply for an unsecured credit card after 12 to 18 months. Your chance of approval really depends on the card—even if you meet the income requirement, you shouldn’t even think about applying until your credit score is comfortably back in the “good” range, between 660 to 724. As your credit score improves, you should start prioritize looking for a credit card with a lower interest rate and no annual fee.

You’re not earning any rewards, or the right kind of rewards

Of all the savvy tips I learned at Canadian Points University in October, the most basic one stuck with me: You shouldn’t pay for large purchases using a debit card—when you do, you’re leaving all kinds of points, rewards, or cash-back opportunities on the table. Of course, you need to pay off your credit card balance in full each month, or rewards lose their value.

Before wading in, ask yourself what kind of rewards you’re looking for. Among the most popular are travel rewards credit cards, which give users the opportunity to travel more (and better) for less by awarding points per dollars spent that can be used toward plane tickets, hotel rooms, car rentals, and vacation packages. The world of travel points hacking is fascinating—I recommend reading my post on Points U for the best tips on how to maximize travel rewards.

If you’re not a frequent traveller, consider a cash-back credit card that refunds you a percentage of every dollar spent on your card—1% or 2% is standard, but some cards offer a higher percentage or let you choose to earn back more in the categories where you spend the most, such as groceries, gas, restaurants, pharmacy, etc.

Each of the Big Five banks (TD, RBC, BMO, CIBC, and Scotiabank) also have their own reward programs tied to their credit cards, which allow customers to trade points for gift cards, tickets to concerts and sporting events, and merchandise such as electronics, household tech, and jewelry and watches.

You see an enticing sign-up bonus

Sign-up bonuses are a great way to maximize your cash back or rewards earning potential. Bonuses tend to run quarterly, and may include things like a whack of bonus points when you spend a certain amount on your card within the first six months. If you’re planning to put a large purchase on a card, this can be a smart way to save money in the long run. Be sure to check if the card charges an annual fee, which can offset the value of sign-up bonuses. Some issuers may waive the fee for the first year.

You want a secondary card

If you’re looking for a secondary credit card, a no-fee credit card makes a good companion if your primary card already has an annual fee, if you’re looking for a card from a different network (Visa vs. MasterCard, for example), or if you’re seeking rewards different from the ones your current card offers.

Should you close your old credit card?

It depends. While your credit score benefits from having an older account with a history of on-time payments, there are several legitimate reasons to close an old one: the annual fee or interest rate might be too high, for example. If you do keep your older card, use it periodically to keep it active and on your credit report.

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Flickr: frankieleon