Do you know when you should cancel a credit card? There are many reasons why you might want to do so, but choosing the right reason, and the right time, can be hard.
So here are four times you might want to cancel your card:
1. When the Annual Fee Is Due
The best reward credit cards will have a substantial annual fee. Sometimes paying this annual fee is worth it to enjoy the best benefits and the most valuable rewards, but sometimes you have to realize that you aren’t getting your money’s worth. When the annual fee comes due, then it’s time to reassess the value of the card and cancel it if necessary. But before you do, be sure to ask them to waive the annual fee, as some card issuers would prefer to do that to retain a customer.
2. When the Customer Service Isn’t Satisfying You
If you don’t like how you are treated by your electric company, then there’s not much you can do about it. But if you’re dissatisfied with your credit card issuer, then you have many alternatives. We are lucky to enjoy an extremely competitive credit card industry, and there are dozens of banks and credit unions to choose from. For example, American Express and Discover both tied for JD Power’s highest rank in customer satisfaction for 2014.
3. When the Terms of the Credit Card Changed for the Worse
In general, credit card issuers are constantly competing to offer the most favorable credit card terms, but on occasion they will downgrade the value of their cards. Often, this occurs when one of their partners changes their loyalty program for the worse. For example, the Club Carlson Visa from US Bank used to offer cardholders their last night free on award stays, but dropped that option in June of 2015. Considering this card has an annual fee of $75, cardholders may choose to cancel their account and ask for a pro rata refund of the annual fee.
4. You Have Too Many Credit Cards
Each credit card you have means that you get another statement, have to pay another bill. And if it is from a different issuer, you also have to use a separate login and learn how to use their web site. Therefore, some people eventually conclude that they have too many cards, and they need to simplify their finances. In other cases, cardholders find that having a large line of credit tempts them to spend more money and incur debt. If you realize that you have too many credit cards, you can start by closing the ones with the highest annual fees, the ones you use the least, or the ones with the least favorable terms and conditions.