4 signs a credit card is worth ditching

You may want to cancel a credit card if these factors apply to you.

Key points

• Closing a credit card could negatively impact your credit score.
• Despite this, there may come a time when a credit card is worth getting rid of.

There’s a reason why credit card holders are often advised to hold on to their cards, even ones that aren’t used much. Closing a credit card could actually hurt your credit score in several ways.

First, an important factor that goes into this score is your credit utilization rate, which measures how much of your total credit limit you are using at one time. If you close a credit card, you risk reducing your total credit limit, which will make it harder to keep this ratio in favorable territory.

Another issue with closing a credit card is that it could impact the length of your credit history. If you close a long-standing account, the average length of your open accounts could eventually decrease, which is not good for your score.

But let’s say you have a credit card that doesn’t have a very generous spending limit and you haven’t had an opening in so long. In this case, its closure could lead to minimal damage to the credit score. If so, here are four signs that a given card is worth getting rid of.

1. It charges an annual fee but gives you little in return

In some cases, the annual credit card fee may be more than enough. Let’s say you’re charged $95 a year, but in exchange, you can rack up $500 in cash back and rewards, as opposed to the $250 you’d get with another card. That alone makes your expense worth it. But if you’re paying a fee for a card that doesn’t give you anything extra, it doesn’t make sense to keep it.

2. Its rewards program leaves a lot to be desired

Many credit cards these days offer the option of earning extra rewards or cash back. If you have a card that doesn’t do this, or limits you to 1% cashback at all levels with no chance of getting bonus money, then that’s a card you might not want. -be not you cling. Likewise, if your card comes with rewards that expire quickly, you might want to swap it out for one that has a much more flexible rewards program.

3. He charges a high interest rate

In an ideal world, you would pay off your credit card balance in full each month and avoid accruing interest charges. But we all know that’s not always possible. If you have a credit card that charges significantly more interest than any other card in your collection, you may want to close that account.

4. Their customer service is poor

When you’re having trouble with your credit card, whether it’s due to a billing issue or a fraudulent charge, you should be able to contact a customer service representative easily. And once you do, that person should be in a strong position to help you resolve the issue at hand. If this is never your experience when dealing with your credit card issuer, it’s a sign that the card in hand isn’t worth keeping.

Often, it makes sense to hold on to a credit card for the sake of your credit score. But if you have a fairly recently opened account that isn’t serving you well, it might be time to drop that card, especially if these signs apply to you.