Should I Cancel Old Credit Cards When I Get New Ones?
This is a question that never used to be asked, if only because as little as five years ago, customer loyalty meant that people stayed with one credit card for life. Times have changed, and as credit card companies have become more competitive, people have learned the benefits they can reap when they apply for a credit card. Those benefits range from lower interest rates to higher rewards to new customer incentives like discount pricing at your favorite shops or a new iPod. If you've decided to take advantage of a credit card offer and apply for a credit card, what SHOULD you do with your old credit cards?
Depending on what cards you hold and how many, the answer may vary. If you only have one other card, it may be useful for you to pay it down and hold it in case an emergency arises. Creditors will seldom look askance at having two credit cards, especially if the balances on both are kept low and paid off regularly.
It will also be in your best interest to evaluate all the cards that you hold before deciding to drop them. If you often travel overseas, for instance, you may find that one of your old cards has lower overseas fees than your new card, and is worth keeping for that reason. The same holds true if you hold a rewards credit card that pays off big in particular situations. In other words, do a cost-benefits analysis on each of your cards, and choose the ones whose benefits outweigh their costs.
There are good reasons to dump some of your credit cards when you apply for a credit card and are approved though. The first reason has to do with your credit score - having too much available credit can bring it down, and damage your chances of getting the best deals when you're looking for a mortgage, loan or other credit card. The other reason has to do with the competitive nature of the credit card industry.
No one likes to lose customers, after all. Often, when you call to cancel your current credit card, you'll be offered incentives to stay on board with them. Those deals are nearly always worth at least considering. If you do decide to go ahead and cancel the card anyway, you'll become eligible for ?new member' offers in about 18 months - and those offers generally include lower introductory interest rates and special balance transfer deals.
Do keep in mind that not using your card is not the same as canceling your credit card. If you decide to cancel, do it properly according to the instructions given by the credit card UK issuing agent. If you don't, you may find yourself liable for monthly maintenance fees, annual membership fees and other expenses.
When you're in the market to apply for a credit card, you'll find all the best deals at moneyeverything.com, where you can compare credit card rates and incentives and choose your best credit card offer.