There’s no doubt that US citizens love credit cards. According to a study, the average consumer had 2.35 bank cares, as well 1.51 retail cards (rewards cards or other types) back in 2016. And yes, using credit cards can be a very good thing, as long as you do it properly. On the other side, let’s not forget about the risks they imply.
Considering this, we asked ourselves if it’s actually worth canceling a credit card. Well, in a few special situations, it can be a very good decision. Let’s break this down a bit.
If the annual fees are growing
Pretty much any credit card comes with annual fees, covering the perks they provide but are they actually worth that much? According to The Motley Fool, a simple math can reveal if the combined value of your rewards is greater than the fee or if you’re being ripped off.
If, in the mean time, your needs change or a recent fee increase is starting to worry you, ask your card issuer what’s happening. A lot of credit card companies are willing to reduce annual fees to prevent canceling a credit card.
If you find better rewards
There’s no doubt that one of the main reason you signed for your current card was the rewards it comes with. However, if you’re having second thoughts or, even better, found another card with a more interesting offer, we don’t see why you shouldn’t consider a change.
Before deciding upon this, though, do a side-by-side comparison and see if, at the end, it’s worth the effort.
If you can’t control impulse purchases
Almost 60% of Americans have taken their credit cards to the limit at least once and this looks like a very bad and hard to break habit. Overspending will end up really bad, thanks to the high APR interest, late fees and max-out penalties.
In this situation, if you are not able to put an end to the spending spree, you should really consider canceling a credit card or two. After all, it’s for your own good!