Is it time to break up with your credit card? For some people, their credit card is their best friend. It’s their ticket to items that they cannot buy with cash. But while credit cards make many items easily accessible, there’s a price to charging. You have to repay this debt, plus interest. And if you’re not careful, credit card usage can spiral out of control and create a serious debt problem. Want to avoid this outcome? Here are seven reasons to break up with your credit card.
1. High Fees
If you’re not happy with the fees charged by your credit card provider, it’s time to break up with your credit card. These may include annual fees and foreign transaction fees. Although these are common on most credit cards, it is possible to find a fee-free or a low-fee credit card. Unfortunately, credit card fees are non-negotiable. For those who aren’t happy paying fees, switching to another credit card is the only option.
2. High Interest Rate
Interest is how your credit card company earns money. Credit card interest rates vary depending on the type of card and your credit history. Someone with a good credit score may qualify for a low rate credit card. But even with impeccable credit, your credit card company may charge a rate up to 20%. You don’t have to accept a higher rate. Compare other credit card rates and choose a card that rewards your good credit habits.
3. Poor Customer Service
How many times have you called your credit card company, only to be greeted by a rude, unprofessional customer service rep? This can happen. This behavior, however, isn’t acceptable. Why put up with abuse when other credit card companies offer superb customer service? Break up with your credit card and go with a company that will appreciate your business.
4. Time to Move on
If you have a no-frills credit card, characterized by no rewards and no incentives, you might consider a different type of credit card to enjoy a few perks. Rewards and cash back credit cards are perfect for people who use their credit cards on a regular basis. You can earn points for every dollar spent, and redeem these points for merchandise, gift cards and travel.
5. You’re Finished with Debt
Finally, you’ve paid all your credit cards. Some people have self-control, and after paying off a credit card, they avoid additional debt. If you doubt your ability to keep your credit card balances in check, break up with your credit card. Don’t cancel the account, as this can damage your credit score. Freeze or cut the credit card in half to remove any temptation.
6. Get Rid of a Joint Account
Maybe you shared a credit card account with your spouse. If you’re ready to break free and separate your accounts, you can remove your name as an authorized user on the account, or pay off the balance and close the account. Closing a credit card account isn’t the best move, but it is the fastest way to break free and reduce your liability.
7. Too Many Accounts
Do you have five or six credit cards and feel that it’s financially wise to scale back? If you decide to break up with your credit card, there is a trick to limiting credit damage. Older credit card accounts play a vital role in your credit score, as the length of your credit history accounts for 15% of your score. To play it safe, close or cancel your newest accounts first.
Credit cards aren’t bad and they can be useful when you need emergency cash. However, your terms do matter, and some credit cards are better than others. Ready to take charge of your credit life? Why did you choose to break up with your credit card?