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According to recent financial studies, the typical American is resistant to change when it comes to a credit card. “If it ain’t broke, don’t fix it,” right? Not necessarily. A reported twenty percent of consumers haven’t shopped for a new one for 10 years. If you’ve stayed with the same card for a substantial period of time you could be paying much more in interest rates and fees than necessary. You could also be missing out on great rewards and sign-up bonuses from new cards.

If you’re interested in taking a look at what else is available on the market but aren’t sure if it’s the right time, check out these five reasons why you may want to start doing your research:

1. Your current card has poor customer service

There are so many cards out there that offer personal, friendly service that you should never settle for anything less. If you’re less than satisfied with the way your credit card company has treated you, it’s probably time to put your feelers out for a better situation.

With current technology, card issuers should be available most any time you need them, especially in the event your card has been lost or stolen, or your identity has been compromised. If the customer service department for your current card is unfriendly, unhelpful, or makes it difficult to find out necessary information, it’s time to make a change.

2. You’ve made a major life change

If you’ve recently retired, had a baby, got married, bought a home, or made a career change, it may be time to change your credit card as well. As previously mentioned, a new card could offer better rates, as well as more applicable rewards for your current life situation.

It’s important to find a card that adjusts to your level of spending rather than trying to adjust your habits to a particular card’s rewards program. For example, it you’re a new parent it may make much more sense to find a card that offers cash back on groceries, versus sticking with one that only gives rewards for dining out.

3. You have a specific savings goal in mind

Let's say you want to do some major home renovations or take an extended trip. It’s important to be equipped with a credit card that can help you achieve your goals.

If you’re in the position to pay off your credit card balance immediately with savings you’ve already built up for a major purchase, you may consider going with a card that offers a stellar sign-up bonus. The points you’ll receive from making that major purchase could just be enough to earn free airline miles, hotel credits, gift cards, or other merchandise that will assist with your goal. Even if you desire cash back instead of points, there are still plenty of new card offers that can save you some much-needed cash as you pursue your goal.

4. You’ve had your card since before 2008

If you’ve had the same card since before the recent economic downturn, you should strongly consider going in a different direction.

In the last decade, your credit score is likely to have increased. At the same time, interest rates on many credit cards have decreased. For that reason, it’s likely your old card’s interest rate is higher than it should be. The trouble is, many people don’t bother to check as often as they should. Compare your rate to that of new cards to see if it would be worth switching companies. Or, you may be able to negotiate a new rate with your current credit card. It never hurts to ask. Many companies will be willing to work with you, especially if you’re a loyal, longtime customer.

The bottom line:

There are several reasons why it’s worth at least shopping around for a new credit card. If you do decide to make the switch, remember to proceed carefully when it comes to cancelling old cards.

If you close a card with a high credit limit and long payment history, it will reduce your available credit. That will lead to a higher debt-to-credit ratio and possibly lower your credit score. Closing your oldest card will decrease the average length of your credit history. This could could also lead to a lower credit score. You may be able to request a downgrade to an account without a fee. Some card issuers will be willing to waive fees in order to keep you as a customer.

For additional credit card related questions, check out this previous blog post. You can also talk to a financial expert who can offer advice.

Ron L. Brown, CFP®

Author Ron L. Brown, CFP®

Ron is a CERTIFIED FINANCIAL PLANNER™ and president of R.L. Brown Wealth Management. He specializes in retirement, estate, and business planning for professionals and entrepreneurs. Ron assists his clients with creating a financial plan to ensure they are able to live their ideal lifestyle during retirement and leave a strong legacy for their family. Ron has been featured in The Wall Street Journal, US News, Yahoo Finance, Investopedia, and numerous other high profile financial publications.

More posts by Ron L. Brown, CFP®

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