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Human beings are creatures of habit: Once we're used to something, it can be difficult to try something new, whether it's the food we eat, the clothes we wear or even the credit cards in our wallets. In fact, a 2018 survey indicated that 40% of U.S. credit card holders have never changed their primary credit card—or go at least a decade without doing so.
If you're one of these consumers, you could be leaving a lot of money on the table. Case in point: A recent study found that credit card sign-up bonuses have nearly tripled from 10 years ago. What's more, with today's low-interest rates and balance transfer offers, you may be missing out on significant savings when it comes to your credit card debt.
The new year is the perfect time to consider refreshing the credit cards in your wallet. Here are three reasons it's a smart idea to shop around for a new card now:
1. You Could Earn a Lot More in Credit Card Rewards and Perks
If you haven't gotten a new card in a while, chances are you're missing out on significant rewards. The credit card rewards landscape has gotten uber competitive in recent years, with issuers offering all sorts of new incentives to capture consumers' business. Many travel credit cards, for example, not only offer miles and points for travel purchases, they've added other significant perks like fee credits for trusted traveler programs such as Global Entry. The Capital One Venture Rewards Credit Card, for example, offers 2 miles per $1 spent on every purchase, comes with a 60,000 mile intro bonus if you spend $3,000 in 3 months, and comes with an application fee credit of up to $100 for Global Entry and TSA Precheck once every four years.
Intro bonuses are also extremely competitive right now, with some cards, such as the Hilton Honors American Express Surpass® Card, offering as many as 130,000 Hilton Honors Bonus Points (after you spend $2,000 in purchases on the Hilton Honors American Express Surpass® Card in the first 3 months of Card Membership) for a limited time. Offer expires 8/25/2021. Terms Apply
To find the best rewards cards for your needs, check out the best rewards cards available through Experian CreditMatch.
2. You Could Boost Your Credit Scores with a New Credit Card
Worried that a new credit card application will result in a hard inquiry on your credit report that will drag your credit scores down? Don't stress about it. Typically, a hard inquiry only sets your score back a few points for a short period of time, generally less than 12 months. Your score rebounds from a hard inquiry pretty quickly. As long as you're not applying for multiple new lines of credit at once, your credit scores are safe.
In fact, adding a new credit card to your credit file could actually help boost your scores in the long run. That's because new credit can actually help your credit utilization ratio, or the amount of credit you use in relation to the amount of credit you have available to you. This is one of the most important factors in calculating your credit scores.
Your credit utilization ratio is calculated by adding all your credit card balances at any given time and dividing that by your total credit limit. For example, if you typically charge about $2,000 each month, and your total credit limit across all your cards is $10,000, your utilization ratio is 20%. But if you add another card to your wallet (increasing your total credit limit) but keep your spending the same, your utilization ratio will decrease.
Experts suggest keeping your utilization ratio below 30% and, for the best scores, below 10%.
You can get your FICO® Score☉ from Experian to see where your utilization ratio currently stands.
3. You Could Save Money on Interest
If you typically carry a balance on your credit cards, it's smart to shop for the card with the lowest interest rate possible. Your credit scores may have improved since the last time you applied for a card, which means you probably qualify for cards at lower rates now. Or you may be able to take advantage of a promotional rate that can save you money as you pay down your debt.
For example, a number of cards currently offer generous introductory 0% APR financing. That means you can put your spending on one of these cards and pay off the debt during a promotional financing period without paying any interest at all. For example, the Wells Fargo Platinum card is offering an introductory APR of 0% for 18 months from account opening on purchases and qualifying balance transfers, one of the longest intro periods available, with an ongoing APR of 16.49%-24.49% (Variable) after the conclusion of the introductory period.
Find some of the best low-interest credit cards for your needs here.
Unsure how to determine whether you qualify for a credit card for your needs? Sign up for Experian's CreditMatch for free. It will pair you with the credit cards you qualify for based on your FICO® Score. Once you are matched with cards, you can compare them by features and card type.