Credit Card Rewards Must Suit You

It would be nice to think there’s not someone out there who’s never been on an airplane–and never plans to–who has a card that earns them air miles. However, you just know that somewhere precisely such a person exists.

But before you laugh too loudly, you might just want to check your own wallet. Because a combination of changing lifestyles, and amended credit card terms and conditions may mean that many, many Americans are currently signed up for credit card rewards programs that don’t really suit them.

Credit Card Debt and Credit Card Rewards Don’t Mix

To start with, most people who don’t pay off their balance in full every month should probably select a credit card based on the lowest interest rates possible and not on the credit card rewards program.

But you might not be getting the best deal, even if you do pay off your balance every month. More and more credit card companies are imposing annual fees on their cards that carry valuable rewards programs (and on some that don’t), and a little cold arithmetic is necessary to see if a card that was once a winner is now somewhere toward the back of the pack.

Credit Cards & Lifestyle

Another factor that could have made one of your cards less attractive without your really noticing is a change to your lifestyle. If you’re one of millions of Americans who fly less frequently, stay in hotels less often, and have cut down on car rentals, then perhaps you should be looking for cash rewards rather than freebies.

Of course, if your lifestyle still involves a great deal of travel, then a rewards program with travel perks could still be highly valuable. The American Express’s Starwood Preferred Guest card is a good example of a card that can return real value to the right person.

Research Before You Do Anything

If you find that you ought to change one or more of the cards in your wallet, then you should obviously search out the deals that most closely suit your way of life. That could involve finding a different rewards program, or it could simply mean exploring the range of low interest credit cards–as far as such things still exist.

But think before you sign that new credit card application. You need to have an excellent credit score to get a new card, so it could be a mistake to burn your bridges.

And simply cancelling an existing card can damage that credit rating, as can making multiple applications. So it’s often better simply to cut an existing card in half, and let the account die slowly and naturally through disuse.

Published 11/13/09 (Modified 04/23/12)