Have You Outgrown Your Credit Card?

US News

We all invest a lot of time making financial decisions, but as our lives evolve, it's essential to revisit those choices and re-evaluate. For example, there's a strong possibility that you've outgrown your credit card -- and don't even realize it. Not sure if this is true? Ask yourself the five questions below to find out.

1. Have I moved?

Moving to a new area is a great time to take a look at your regular credit card and decide if it's still the best one for you. Here's why: Relocating sometimes means substantial changes to your usual routines. As a result, where you spend your day-to-day dollars could change, too. Of course, you want to use a credit card that provides primo rewards on your spending, so it might be time to switch cards.

For instance, if you moved from a suburban area to a big city and sold your car, you'll want a credit card that rewards you for spending on cab fare as opposed to gas. For insight into how your swiping might have changed because of your move, analyze your monthly billing statement -- it will give you a clue about which rewards programs you should look for.

2. Did I get a new job?

If you're a recent college graduate and just got your first salaried job, it's time to upgrade from your student credit card.

With your new income and the good credit you've built up from using plastic responsibly as a student (right?), you should be able to qualify for a card with favorable terms and a decent rewards program. This is an important step on the road to an excellent credit score; demonstrating that you can qualify for new credit, and then using it prudently, will keep your score climbing over time.

3. Has my credit substantially improved?

Going through a tough financial period sometimes leaves your credit score in less-than-ideal shape. If you found yourself in this situation and opted for a secured credit card to help rebuild your score, you made a smart move. Assuming this plan was effective and your credit has substantially improved, it's probably time to advance to an unsecured (regular) credit card.

You can accomplish this in one of two ways: asking the issuer of your secured card to convert your account to an unsecured version, or applying for a different card of your choice. Either way, this will help you raise your score even more and give you the opportunity to use a card that will provide better rewards.

4. Have I had a significant lifestyle change, such as getting married or having children?

Like moving, other big life events can affect what you're spending the bulk of your cash on. As a swinging single, a credit card that offers big rewards on travel and entertainment was probably just the ticket. But getting married might mean slowing down a bit, so opting for a card that will give bonus points or cash back on dining out could be a better fit.

Ditto if you've recently become a parent -- your grocery spending is probably increasing while your restaurant and entertainment spending could be decreasing. Again, the key is to find a card that will give you something valuable in return for the swiping you're most likely to do.

5. Did I recently pay off lingering credit card debt?

Taking advantage of a 0 percent balance transfer offer to consolidate and pay off credit card debt is a great idea. After all, you'll save money on interest and simplify your finances.

But once the debt is paid off, you might want to think about using a different card for your daily spending. Some popular balance transfer credit cards don't offer rewards programs at all, which isn't ideal. Plus, it's likely that your 0 percent period is up, so there's no real benefit to holding onto the card. Shop around for a different one, so you can use the best plastic for your new, debt-free life.

The takeaway: As your life changes, it's likely that your credit card needs do, too. Ask yourself the five questions above when deciding whether or not it's time to update the contents of your wallet!



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