Should You Keep That Credit Card? 3 Ways to Decide

As an individual, one of the best ways to establish and maintain a strong financial footing is by understanding the benefits and drawbacks of owning a credit card. The decision of whether to keep that credit card or not requires an informed understanding of the implications of using one. In this blog post, I will be focusing on understanding the benefits of having a credit card, considering how a credit card can impact your credit score, factoring in financial goals when considering a credit card, calculating spending limits and setting expectations for your credit card, exploring the different types of credit cards available, staying on top of fees and interest rates associated with your credit card, using rewards programs effectively to maximize your credit card experience, and finally examining what happens when you cancel a credit card. In the end, I will provide insights on how to decide when it is the right time to keep that credit card.

Understanding The Benefits Of Having A Credit Card

Credit cards offer a great way to help manage finances and build credit, without having to pay for anything upfront. Not only do credit cards give users access to credit, which can help them purchase things they otherwise wouldn’t be able to afford, but they also allow users to build credit, which can be used to purchase larger items in the future such as cars and houses. As an added bonus, many credit cards come with rewards and cashback.

Recognizing the Dangers of Credit Cards

Unfortunately, if credit cards are not used responsibly, they can become a source of financial strain. High interest rates can make monthly payments unaffordable, leaving the user in debt. In addition, Credit card debt can easily accumulate and become unmanageable, as more and more purchases are made. Furthermore, many credit cards include fees that can cost the user in the long run.

Practicing Credit Card Smart Habits

In order to make the most of having a credit card, it is important to keep the following tips in mind:

  • Develop a budget. It is important to set a budget that accounts for the monthly payment and other expenses.

  • Compare rewards programs. Depending on one’s spending habits, it is important to research rewards programs and decide what credit card best fits one’s needs.

  • Pay credit card off in full every month. It is important to always pay the credit card balance off in full each month in order to avoid high interest rates or accumulating debt.

By understanding the risks and rewards of having a credit card and by establishing smart spending habits, users can take advantage of the perks of having a credit card while also avoiding common pitfalls.

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Considering How A Credit Card Can Impact Your Credit Score

When you use a credit card responsibly and make payments on time, it can help to build your credit score. However, it’s important to get a clear understanding of how your credit score is affected by your credit card activities.

Readers should know that there are several ways to ensure good credit health. These include regularly paying off your balance, avoiding large amounts of debt and not maxing out your credit limits. It’s important to develop financially responsible habits when it comes using a credit card.

Monitoring Your Credit Card Activity

It’s also essential to keep an eye on your credit score and annual credit reports to make sure your credit card activities are being properly reported. A low credit utilization ratio, which is generally suggested to be 30% or less, is a positive reflection on your score. However, it’s worth noting that only carrying a balance on your credit card won’t necessarily boost your credit score.

Evaluating the Benefits & Risks of Closing a Credit Card

When you’re generally dealing with an elevated credit card balance, closing it can seem like the right decision. In fact, it could even have the opposite effect and end up damaging your credit score.

This can occur when you close a credit card account that you’ve held for a long time, as this can negatively affect your credit history. It’s also important to keep in mind that any unused credit limits are removed from your credit report once the account is closed.

On the flipside, there are potential scenarios where you may want to keep your current credit card. For instance, if it has a positive credit history or it offers spectacular rewards, benefits and invitation offers, it could serve in your best financial interests to keep it.

For some readers, the best approach might be to keep the account open and decrease the utilization ratio on it. This will allow you to use credit as a tool for future purchases and take full advantage of any long-term benefits that come with it.

If you’re still struggling with whether or not you should close out your credit card account, consider speaking to a friend or financial advisor who can provide more personalized advice. They can help you create a plan that considers the unique factors of your financial situation.

should you keep that credit card

Factoring In Financial Goals When Considering A Credit Card

If you’re on the fence about whether or not you should keep a credit card, there are a few factors you should consider. Here’s what you need to ask yourself to make an informed decision about whether or not the card is right for you.

Look At The Interest Rates

When looking at a credit card, you’ll want to take a close look at the interest rates. This is especially true if you think you may have to carry a balance each month. A high interest rate can add up quickly and make it difficult for you to pay off the card in full. Look for cards that offer low interest rates, as these will save you money in the long run.

Identify Your Financial Goals

It’s important to consider your financial goals when looking into a credit card. Ask yourself if this card will help you reach them or not. For example, some cards offer cash back on groceries and other purchases that can help you save money.

If you often travel, you may want to look for a card that offers additional benefits, like travel credits or access to airport lounges. Choose a card that offers benefits and rewards that align with your lifestyle and financial goals.

Examine The Benefits

It’s important to look beyond just the rewards. Take a closer look at the other benefits the card comes with. You may be able to take advantage of free warranty service on purchases or free international travel insurance. Analyze the various benefits and rewards to find the card that will be the most beneficial for you.

Consider Your True Cost

Finally, make sure you’re not stuck with any hidden fees. Some cards come with annual fees which can eat away at the rewards you earn. Make sure the card you choose is going to be worth the cost in the end.

By taking the time to consider each of these factors, you can decide whether it makes sense to keep a certain credit card or if it would be better to cancel or find another one. Knowing these details can help you make an informed decision that will save you money in the end.

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Calculating Spending Limits And Setting Expectations For Your Credit Card

It’s important to consider how you will use a credit card responsibly and how to manage it effectively. Utilizing a credit card can provide benefits, however, these potential benefits won’t come to fruition if not managed correctly. In this section, I’ll provide some helpful advice on how to calculate a reasonable spending limit, how to set clear expectations for your credit card payments and how managing it correctly can help improve your financial well-being.

Create a Budget and Set Expectations for Your Credit Card

Before deciding to take on a credit card, it is important to create a budget and use it as a basis for calculating your reasonable credit card spending limit. Before considering discretionary items, prioritize essential monthly expenses in order to ensure you have the necessary funds available to pay the credit card bill. Making sure to have an emergency savings fund will ensure you don’t have to rely on credit card debt during tough times.

Once you have determined your reasonable spending limit, it is important to set expectations for your credit card payments. Paying more than the minimum due each month will help avoid accrual of interest and potentially helping you pay down the balance faster. Taking advantage of due date flexibility by asking creditors to adjust the payment plan to best suit your needs is a good idea to stay ahead of payments. Enabling the autopay feature allows you to not worry about missing payments due to other priorities.

Benefits of Responsible Credit Card Use

Managing your credit card responsibly has many potential benefits, such as improved credit score. A credit score can be improved by regularly making payments on time, not exceeding the spending limit, and keeping the balance low. This can help you qualify for better interest rates when applying for a loan or mortgage. Furthermore, a positive credit score can increase your chances of obtaining a job since it shows potential employers that you are financially responsible.

An example of a successful credit card success story comes from Ryan. Ryan got into financial trouble after getting hit with unexpected medical bills and had a credit card to cope with it. At first, he struggled to make ends meet and was nervous that his credit score would drop. However, he made a plan, paid his credit card on time, and kept his balance low. As a result, he was eventually able to increase his credit score, which allowed him to secure a better interest rate on a car loan.

By accounting for your income, expenses, and setting expectations for credit card payments, you can manage your credit card responsibly and financially benefit from it. Plus, it’s also important to remember that an emergency savings fund should be a priority over additional credit card debt. So keep that in mind if considering taking on a credit card.

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Exploring Different Types Of Credit Cards Available

Every credit card has its purpose, whether you’re looking for benefits such as cash back rewards, or searching for a low interest rate option. Here are some of the common types of credit cards available:

  • Cash Back: Credit cards that offer cash back rewards are a great option for those looking to get back a portion of the money they spend. On top of any promotional offers, cash back cards usually provide anywhere from 1-5% of all purchases back in the form of cash.

  • Rewards: Rewards credit cards are also popular as they allow users to redeem points they accumulate on purchases made with the card. Rewards points can be used to redeem items or discounts on products or services.

  • Travel: Travel credit cards are perfect for frequent travelers. A travel card can provide you with a variety of perks that could make the journey smoother, such as complimentary upgrades, free checked baggage, reward points, and more.

  • Balance Transfer: If you have multiple credit cards that come with high-interest rates, it may be beneficial to opt for a balance transfer card. By transferring your existing balance from your current cards to a balance transfer card, you will be able to pay off the debt with one card at a much lower interest rate.

  • Low Interest: Low-interest credit cards are suitable for customers who use their card to pay for large purchases and spread out the payment over time. For customers who may not pay off their balance completely each month, the low-interest rate on these cards is valuable.

  • Store Cards: Store cards are primarily used to purchase items within the specific store that it is affiliated with. Most store cards come with their own unique bonus and reward programs.

Understanding Your Spending Habits

Understanding your spending habits is important when deciding which credit card is right for you. It all comes down to how you want to use the card. Do you prefer convenience over rewards? Do you need a travel card? Do you want to transfer your existing balances?

The answers to these questions can help determine the type of credit card that is best suited for your needs and spending habits. The way you use your card and decide to pay for large purchases can often influence which credit card you choose.

Deciding Which Card Is Right For You

When it comes to choosing the right credit card for your needs, there are many advantages and disadvantages to consider. Which card you choose will ultimately come down to your personal preferences and spending habits. To help make the decision easier, here is a brief overview of the pros and cons of each type of card.

Cash Back Cards

A cash back card is ideal for customers who would like to get a portion of their spending back in the form of cash. It’s important to pay attention to the reimbursement rate when considering a cash back credit card. Most cards offer 1-5% of your spending back.


  • Receive cash back on all spending
  • Low or no annual fee


  • Foreign transaction fees
  • Most cash back cards come with higher APR rates

Rewards Cards

If you are looking to receive additional perks, such as discounts or points that can be used towards purchasing items or services, then a rewards card may be the best option for you. Rewards cards usually offer a variety of promotional offers throughout the year.


  • Receive valuable rewards such as travel miles, merchandise, and discounts
  • Many rewards cards offer a 0% introductory APR


  • High foreign transaction fees
  • Higher APR

Travel Cards

If you’re looking for some perks and rewards when traveling, a travel card can provide you with a variety of valuable rewards such as free upgrades and complimentary checked bags.


  • Receive complimentary upgrades and complimentary checked bags
  • Travel miles and rewards points can be redeemed for various purchases


  • High annual fees
  • Rewards may not always be the most convenient

Balance Transfer Cards

If you have multiple credit cards with high-interest rates, a balance transfer credit card can help you save money. Instead of paying your current cards with a high-interest rate, you can transfer your debt to a balance transfer card with lower or 0% APR.


  • 0% intro APR
  • No annual fee


  • Low reward potential
  • Balance transfers are usually allowed for up to a certain amount

Low Interest Rate Cards

A low-interest rate card can be a great option for customers who plan on carrying over a balance from month to month. The low-interest rate can help you save money on interest payments.


  • Low-interest rate
  • Option to carry over a balance from month to month


  • Limited rewards
  • Some cards may have high annual fees

Store Cards

Store credit cards are exclusive to the store they are affiliated with and come with their own bonus and rewards programs. Generally, store cards come with higher interest rates.


  • Receive bonus points or rewards
  • Reduced prices on items


  • High-interest rates
  • Rewards may be limited to the store they are affiliated with

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Staying On Top Of Fees & Interest Rates Associated With Your Credit Card

Whether you’re considering a new credit card or you already have one, it’s important to understand the different fees and interest rates associated with the card. Knowing this information can help you decide if it’s worth keeping the card or looking elsewhere.

Understanding Your Fees

When it comes to credit cards, there can be several different types of fees you need to be aware of. These may include annual fees, late fees, foreign transaction fees, cash advance fees, and balance transfer fees. For instance, a credit card may have a higher annual fee but offer additional benefits such as a miles program or greater rewards.

It’s important to assess exactly how much these fees add up to and determine if the card is worth the cost. Calculate the total cost of these fees on an annual basis and make sure that what you’re getting is really worth it.

Interest Rates

The interest rate on your credit card is also something to consider. Some credit cards may offer a 0% introductory period before increasing to a higher rate after the introductory period ends. When you’re comparing cards, look at the interest rate and determine which one will give you the most value in the long run.

Monitoring Your Spending

Once you’ve chosen a card to keep, be sure to keep an eye on your spending. Create a budget that tracks your spending, manage cash flow, and pay your bills on time each month. This will help you stay on top of your finances and avoid any penalties or fees in the future.

It can also help if you set up an automatic payment system for your credit card. That way you can make sure you always pay your bill on time, so you won’t have to worry about any late fees or other charges.

Lastly, if you’re planning on carrying a balance on your credit card, look for a card with low-interest rates. That way, you can pay off your balance quicker.

Final Thoughts

When you’re trying to decide if keeping a credit card is worth it, it’s important to consider fees, interest rates, and your spending habits. Take the time to assess the different fees associated with the card, such as annual fees, foreign transaction fees, and balance transfer fees. Also, consider the interest rate, and be sure to stay on top of your spending by setting up a budget and setting up an automated payment system whenever possible. This can help ensure you use credit responsibly and avoid any troublesome fees and liabilities in the future.

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Using Rewards Programs Effectively To Maximize Your Credit Card Experience

Using credit cards responsibly and taking advantage of rewards and sign-up bonuses is one of the best ways to fully maximize your credit card experience. From points and miles, to cash back and store discounts, rewards programs can be an invaluable tool for anyone looking to get more out of their credit cards.

When shopping around for the best rewards program for you, there are many factors to consider, including annual fees, interest rates, and redemption options. Annual fees can be a make-it-or-break-it detail, and if you’re applying for a card that charges one, you’ll want to make sure the rewards are generous enough to offset it. Interest rates will vary depending on the card, so take the time to shop around and find the one that suits you best, bearing in mind annual fees as well. Lastly, make sure that the redemption options are ones that you’ll actually make use of, or else you won’t be getting the most out of your rewards program.

One of the most successful methods to employ in order to maximize your credit card rewards experience is taking advantage of sign-up bonuses. Many programs offer a hefty bonus as an incentive to get customers to sign-up, and it’s worth it to make use of these incentives whenever possible. Additionally, given the fact that most cardholders have monthly spending limits and/or budget, it’s wise to take advantage of such free money by maxing out your spending and redeeming those points for the biggest reward boost.

If you want to make the most of your credit card experience, there are certain best practices that you can follow. One of the best, most consistent ways to maximize rewards is to use a single rewards program for one card. Once you find the rewards program that is the best fit for your goals, look for cards that target it specifically. You can also vary your card usage based on the types of purchases you make and the respective reward you might get. Lastly, explore ‘ rotating rewards’ programs, where new rewards are introduced on a rotating basis and allow you the possibility of making consistent use of your card and racking up those rewards.

Finally, research suggests that it can take various lengths of time to break even on a card with an annual fee depending on the type of rewards they offer. Cash back cards typically have the shortest break-even period, with some cards breaking even after as little as 5-6 months. Other cards may require 12-24 months of consistent spending in order to break even, so use this as a guide when making your decision.

Overall, using rewards programs responsibly is an excellent way to get the most out of your credit card experience and a great way to maximize your savings. Make sure to pay attention to fees, rates, and redemption options when evaluating rewards programs, take advantage of sign-up bonuses, and use cards in a targeted manner to reap the full benefits. With a well-informed approach, you can take full advantage of rewards programs to ensure you get the most out of your credit cards.

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What Happens When You Cancel A Credit Card?

Canceling a credit card can have a significant impact on your credit score. It’s important to be aware of how closing a credit card affects the average age of your credit accounts and your utilization ratio before considering canceling any credit card.

Speaking With Customer Service

Even when you think it’s time to close a credit card, it is important to speak with customer service to discuss your options. You may be able to negotiate a lower interest rate, waive late fees, and even keep the card open. This can create a win-win situation when compared to canceling your credit card.

Keeping An Existing Credit Card

In some cases, having an older credit card on your account can really help to average out your credit age. Especially if you have a large amount of debt and a high utilization rate, having an aged credit card on file can be beneficial.

When To Close A Credit Card

It rarely makes sense to close a credit card if you are still using it or have a balance on it. Closing a card while you are making purchases on it or while it has a balance can result in a decrease in your credit score.

What Happens To Your Credit Limit

When you cancel a credit card your total available credit will decrease. This can lead to a decrease in your credit utilization ratio which will have a negative effect on your credit score.

Other Considerations

It is worth noting that having a longer credit history can mean being eligible for other special offers or discounts such as airline miles, cash-back rewards, and other special perks. Before canceling a credit card, it is important to consider the potential rewards and benefits you might miss out on.

Ultimately, deciding whether to keep or cancel a credit card is a personal decision. Weighing the pros and cons and evaluating each credit card individually are important steps to consider when making such an important financial decision.

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After considering all the factors, it can be said that having a credit card can be a good choice. It’s a versatile tool which allows more financial flexibility and can provide advantages such as being able to better purchase items, improve credit scores, and use rewards.

That being said, it’s also important to do the proper research and understand the fees, interest rates and other associated costs that come with obtaining and using a credit card. Furthermore, one should always consider their financial goals and make sure to stick to a budget, regardless of the credit line offered by their card.

All in all, the decision to keep or cancel a credit card is completely up to the individual. As long as you are able to stay within budget and think about the long-term financial goals, a credit card may prove to be a worthwhile addition to your wallet.

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