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Is it time for a new credit card? Here's how to choose the best one for you

You may be leaving money on the table by sticking with an old credit card.
Image: Credit card
Before getting a new card, look at your life and habits — and read the fine print.Poike / iStockphoto via Getty Images

When’s the last time you switched credit cards? According to a new study from, 40 percent of American cardholders have never changed their primary card — or have gone at least 10 years without changing. That may be costing them some serious money. For starters, today’s intro bonus offers are almost three times what they were a decade ago. Additionally, today’s low interest rates and balance transfer offers have meant that if you do carry a balance on your old card, you’re not only missing out on rewards — you’re very likely passing up the chance to get out of debt faster and cheaper.

These days, it’s downright silly for people to earn nothing on their spending, says Thomas Donaldson, Senior Credit Specialist at CompareCards. “Ten years ago you would have said it was crazy to [receive] a sign-up bonus of $500 just for spending $3,000, but today that tends to be the norm. That’s huge compared to what’s been available in the past.”

If you’re afraid to apply for a new card, don’t be.

Some people may be worried about the negative impact on your credit score when the financial institution to which you’ve applied checks your credit — a so-called “hard pull.” No need, says Matt Schulz, senior analyst. “The hard pull will ding your credit score for a short time, but we’re talking about months, not years, and it’s just a few points,” Schulz explains. “It’s not something people need to worry about.”

A new card can actually help your credit in the long run — it increases your pool of available credit and improves your credit-to-debt ratio.

In fact, a new card can actually help your credit in the long run, because it increases your pool of available credit, and improves your credit utilization ratio (credit-to-debt ratio), which is the second most important factor for your credit score after your payment history. (To make sure you’re increasing your credit lines rather than decreasing them, don’t close your old card unless it has an annual fee.) “It’s much better to have $5,000 in debt and $20,000 in available credit than $5,000 in debt and only $10,000 in available credit,” Schulz says.

Before getting a new card, look at your life and habits — and read the fine print.

As you start searching for a new card, first recognize that your 10-year-old one probably fits you about as well as a 10-year-old pair of pants. “How you spend money has likely changed a lot over that time, so it would make sense to shop around for a better fit.” Schulz explains. For example, if you’re someone who loves travel, look at cards with airline miles, or if you spend a lot of money on groceries, there are cards that offer perks for that. Before you make any decisions, look at how you can save the most money when you redeem your points, says Sharon Epperson, CNBC Senior Personal Finance Correspondent and Host of RetireWell.

“I have a card that offers travel rewards and cashback, but the dollar-to-point ratio is far better if I’m redeeming those rewards for travel than if I’m getting cash back, and I don’t think a lot of people pay attention to that. It’s important to really do the math and see how to get the absolute most you can,” Epperson says.

There are no “rewards” for going into debt — if you get a new card, make sure you don’t carry a balance.

Being smart with your new rewards card — or any credit card — is essential. Nearly 40%percent of rewards cards users carry a balance, according to a study by (the average was around $2,500). And one in five people report tracking their miles more often than they track their checkbooks — a very dangerous habit.

Rewards cards carry higher interest rates, so if you know you aren’t going to pay off your balance in full, they aren't the best option.

“Rewards cards carry higher interest rates, and have higher annual fees, so if you know you aren’t going to pay off your balance in full, rewards cards are not the best option,” CompareCards’ Donaldson explains. Planning to use your rewards card to retire debt — which about ⅓ of people surveyed cop to doing — is also a bad move. “If you’re earning 2 percent cash back, that’s irrelevant if you’re paying 17 percent APR,” he says.

To show how quickly carrying a balance can wipe out rewards, take the Capital One Venture card, which comes with a 50,000 mile bonus after spending $3,000. That bonus is worth $500 in travel rewards. But if you don’t pay off that $3,000, and the card’s interest of 19 percent a year kicks in, it’s going to cost you $570 — which is more than you got in rewards. “Rewards are absolutely meaningless when you pay more money in interest than the rewards are worth,” Epperson says.

Curious about your next card?

As you survey the landscape for your next card, here are a few things you may want to consider. Just remember, a “sign up” bonus is actually a “sign up and spend several thousand dollars” bonus, Schulz says. “You have to decide if you’re comfortable spending enough to get that bonus, and if you can pay it all off quickly.”

  • Capital One Venture gives a 50,000 point bonus after you spend $3,000 in three months.
  • Chase Sapphire gives a 50,000 point bonus after you spend $4,000 in three months.
  • The Gold Delta Skymiles Business Card from American Express gives 50,000 point bonus after you spend $2,000 in three months
  • The Wells Fargo Cash Wise Visa offers a $200 reward after spending $1,000 in the first three months

With Kathryn Tuggle


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