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Plan Well, Retire Well

Saving and investing your money

Is it time to trade in my credit card?

I'm continuing to evaluate the basic financial products that I use. Last week, I invited you to look over my shoulder as I investigated whether my current checking account was still the best one for my needs. This week, I'm applying the same thinking to one of my major credit cards. We'll call it Card A.

Step 1: Look at how I use the card and figure out what card terms and features would be best for me.

  • I'm a convenience card user, meaning that I charge items and then pay the balance in full by the due date. I don't pay any interest, and I'm not terribly concerned about the interest rate.
  • I want a rewards card, so that I get some benefit for charges I make. I prefer getting cash awards, so that I can use it however I want.
  • I don't charge a great deal on this card, since I have another card (Card Z) whose rewards I receive automatically, and they are as good or better than the standard rewards on Card A. Unless I find a new card whose rewards are even better than Card Z, I still won't charge much on Replacement Card A and won't earn a lot of rewards. Therefore, I'm not willing to jump through lots of hoops to get them.
  • The current card requires me to register every few months in order to get a higher rate of reward on certain expense categories. I often fail to register or even know what the categories are, so I'm getting no benefit from these bonus rewards.
  • I don't want an annual fee, especially on a card I don't use that much.
  • Currently, my three major credit cards each carry a different logo. Once in a while, I find myself somewhere that only takes one of them (usually outside the US), so I'd like to replace this card with the same type, just a different bank or credit union.
  • I travel some in foreign countries, and it would be nice to have a card that doesn't charge a foreign transaction fee. But this is less important than my other criteria.

Step 2: Identify the choices. I visited a couple of different card-comparison websites where I could sort card offers based on various criteria.

* On sites that allow you to compare credit cards, you may be asked about your spending patterns or the kinds of terms you're looking for, but you should not be asked for any personally identifiable information just to compare cards. And don't agree to download anything from a site you're not familiar with.

I particularly looked at a couple of cards I read about in financial magazines that sounded like good candidates. I was disappointed that, in some instances, the terms had either changed since the articles were published or the descriptions were somewhat inaccurate.

Some of the best rewards offers were on cards that required opening an account with a particular broker or credit union. In the end, I just didn't think I wanted the extra complication of another account to manage.

Other generous offers were on cards that have annual fees. Many waive their fees for the first year, but I'm looking for a more permanent choice; I don't want to go through this search again next year, and I don't want to end up with an annual fee because of my procrastination.

There are several other cards that offer rewards and terms comparable to my current card, but none that offered me much additional benefit.

In the end, I decided to stick with Card A. I could increase the rewards somewhat with another card, if I were willing to go through some hassles. But I'd rather simplify my life rather than add complications. And if I am willing to do additional work to get additional rewards, maybe I should just make a point of registering every quarter for the bonus offers on my current card.

I will check this task off my To-Do list, since I did the evaluation and made an active decision to keep this card, rather than keeping it because of inertia. The terms and benefits offered by credit cards change over time, so I'll re-evaluate in another couple of years – especially if my current card revises its rewards structure.

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