4 signs that your credit card is a bad fit

By UK CreditCards.com

We are creatures of habit and often keep hold of credit cards for no reason other than that we have been with the same provider for several years. However, if you consider your situation, you may find that your current credit card is no longer right for you.

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For example, if you signed up for a credit card a few years back, it may have had excellent introductory interest rates, but now has a high APR. Or you may have signed up for a rewards credit card, but never claimed the benefits because they didn't fit your lifestyle.

Over time, we evolve as people, as do our needs and spending. Here are some of the top signs that suggest your credit card is no longer a good fit. 

1. You still have a credit-builder credit card.
These UK credit cards are designed to help consumers with poor or no credit history. They typically have much higher interest rates and lower credit limits as the cardholders are generally seen as a riskier borrower.

When used correctly, these credit cards can help you build your credit history. However, once you have achieved a fair or good credit score, you are better off with a standard credit card.

If you currently hold a credit-builder credit card, you will only want to keep hold of it until your credit rating is on the mend. In order to ensure that you are not keeping hold of the card for too long, check your credit score on an annual basis. As soon as you seem to be on the straight and narrow, consider applying for a credit card that is available to consumers with a fair or good credit score.

2. You are not claiming your credit card rewards.
If you have a rewards credit card, you need to be claiming the perks in order to benefit from the card. Therefore, if you are not taking advantage of the credit card rewards, you are losing out by just paying a high interest rate.

Take a look at your credit card statement and see how many points or air miles you have collected over the past few years. If, over that period of time, you have not built up enough points or miles to claim for a reward, or you have have allowed the rewards you have to expire, you should consider an alternative card.

3. The interest-free period is over.
Interest-free credit cards come with an introductory period where the cardholder does not need to pay any interest on their purchases for a set period of time. This period can be anywhere from six months to 18 months. However, the question you need to ask yourself when you apply for this type of card is, "What is the interest rate afterwards?".

Quite often, interest-free credit cards will have higher interest rates than standard UK credit cards to make up for the bonus period. If you have a high balance on your credit card, this could cost you dearly. If you have this type of card, you may want to transfer your balance to a cheaper credit card as soon as your introductory offer expires.

4. You are collecting the wrong rewards.
This credit card mistake is similar to when cardholders collect no credit card rewards. If you have a rewards credit card that offers you air miles with British Airways, yet you rarely fly and when you do, you usually fly with EasyJet, your credit card seems redundant.

You may have applied for the card when the rewards suited you, but they no longer do. Or you may have heard rave reviews about the card, but later found that the rewards just aren't practical for you.

If you are considering changing to an alternative rewards credit card, you might want to consider a credit card that offers cashback instead as this will prevent you from wasting the perks you have earned.

See related: How to compare airline rewards cards; Balance transfer credit cards: What to consider first

Published: 9 September 2011