About 49 million Americans have never changed their main credit card, according to a recent survey from CreditCards.com. Nearly 20 million people haven’t switched cards in 10 years.
While sticking with your favorite card can reflect positively on your credit score, switching cards or opening a new one, in some cases, can have certain perks, too. For example, you could rack up travel rewards miles or pay a lower interest rate.
If you’re in the market for a new card, here are a few helpful tips:
Do your research
Before applying for a new card, it pays to do a little background reading, says financial website Bankrate.
“If you want a cash-back card for everyday purchases like groceries and gas, do the places you frequent accept the card?” Or, “if the card is for travel,” says Bankrate, “is it commonly accepted in the places you visit or by the airlines you fly?”
When you identify how you want to use the card, look for low interest rates. Rates currently range from the low teens to the mid-20s, Matt Schulz, CreditCards.com senior industry analyst, says. You can get a lower annual percentage rate, though, if you have excellent credit.
Look for perks
Update yourself with the latest credit-card offers, as card issuers often offer sign-up bonuses to new customers. Those bonuses could come in the form of additional credit points, cash back or other rewards, like a free night at a hotel or travel miles.
Grace Cheng and Pedro Pla, the founders of credit-card advice site GET.com, took advantage of those rewards to get an epic trip. Through savvy planning, they accumulated enough credit-card points to save $54,000 on airline tickets, which they used to fly to five continents.
“The time spent planning, comparing cards and working toward the goal” of earning 1 million travel miles “was more than worth it,” they say. However, they add, beware: “Most card bonuses come with a minimum spend requirement within a certain time period.”
Some cards, for example, require you spend a certain amount to get that reward, such as $3,000 or $4,000 within a few months. And “the last thing people should do is overspend to get rewards,” according to Schulz. “That’s just asking for trouble.”
Be careful closing old accounts
Your old credit card accounts can help boost your financial record, CreditCards.com explains. So getting a new card doesn’t necessarily mean you should close out your other accounts.
“Your credit score is based, in part, on your utilization rate,” which is the ratio of how much you’ve spent on your credit card versus the limit on that card. “Canceling old accounts reduces the total amount of your available credit, changing that ratio.” Any balance will utilize a higher percentage of your credit, which could end up hurting your score.
There is an exception to closing accounts, though, Schultz says: If your old card has an annual fee and you’re certain you’re not going to use it anymore, you may consider shutting it down.
Consider your timing
Be aware of your timing on getting a new card. If you plan to make a big purchase like a home or car within a year, you may want to hold off on opening a new card.
“When you ask for a new account or an increase in your credit line, the issuer does a hard inquiry into your credit history and that can lower your credit score,” according to Bankrate. If you have good credit and a lengthy history, though, the inquiry will have less of an impact.