Is it time to spring clean your credit card collection?
Got a wallet overflowing with credit cards? Or have some cards that have literally never left your wallet for payment? If your answer is yes to either of these questions, it may be time to spring clean your credit card collection!
To decide which cards to keep or cancel, ask yourself these four questions.
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Thinking which credit card to spring clean? Read on to find out more!
1. Do you use this credit card often?
A credit card is only favourable if you fully reap the rewards and benefits that come with it. This means using the card regularly to earn cashback and rewards on your spending. Otherwise, you would be accumulating annual fees or interest payments that create an extra burden on your finances. Take stock of the credit cards in your possession, identify those that are no longer useful to your lifestyle, or are rarely used, and consider saying goodbye to them.
2. Does this card benefit you?
Benefits in the form of cashback and rewards are the most attractive part of a credit card. Different cards offer benefits for different aspects, such as shopping, dining, transport and overseas travel. Retired from the ways of a foodie or a shopaholic? Consider if you’ll still need those cards aimed at racking up rewards for these 2 activities.
For many cards, their welcome perks may differ greatly from their usual perks. For example, the card might afford a high cashback rate in the first 3 months as a welcome gift, which subsequently drops from the 4th month of subscription onwards. Take stock of cards that are no longer attractive to you.
If your credit card does not seem to offer you rewards that match your current lifestyle or present spending habits, consider cancelling this card and switching to one that better matches your needs.
Identify cards that benefits you the most and cards that you use on a regular basis. CardsPal is here to help you with it. Use the Cashback Calculator for recommendations on cards that give you the most cashback for your frequent spending. This allows you to compare the cashbacks on your credit cards and choose the best ones.
Amazing features of the Cashback Calculator
Moreover, you could also go to your favourite merchants’ pages on the CardsPal app and check out the top cards selected in the 3 card recommendation categories – Your Best Card, CardsPal’s pick, and No Minimum Spend.
These categories take into account factors such as the card’s discount cap, minimum spend, cashback rate, and how they compare against other cards from similar categories.
All-rounded recommendations on CardsPal
An important pointer is to make sure you’re not pooling rewards from different credit cards of the same bank. In some cases, cancelling one card may forfeit all accumulated points from other credit cards under that one bank. Therefore, be mindful of your credit card rewards before making any cancellations.
3. Am I incurring debt from my credit card?
High annual fees and interest payments may lead you to debt if they are not properly managed. If you find yourself struggling to pay high annual fees of credit cards, consider cancelling these cards. After all, the lower number of cards you have, the lower your annual fees and interest payments will be. You may also consider switching to cards with annual fee waivers to lessen the burden on your finances.
Furthermore, if the reason for large payments is late payment of credit card bills or payment of just the minimum amount, having a prudent number of credit cards would be useful in preventing you from running into debt.
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So many interesting considerations! Have you thought about which of your card is useful?
4. How will cancelling this card affect my credit score?
When organising your credit cards, also consider how cancelling a card will affect your credit score. Consider a situation if you have 2 credit cards. Card A has a balance of $0 and a credit card limit of $10,000. On the other hand, Card B has a balance of $1,000 and a credit card limit of $5,000.
If you cancel Card A, your credit card limit drops to $5000 although your outstanding balance of $1,000 remains the same. This means that you are only utilising 20% of your credit card limit. A decrease in the credit utilisation percentage may negatively impact your credit score.
Therefore, if you would like to cancel a card, start evaluating from the most recently acquired cards instead of credit cards with a history of long-time payments.
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Take note of how your credit card decisions affect your credit score!
Organising your cards and cancelling those that are not needed can take a load off your shoulder. As Marie Kondo would say, if it doesn’t spark joy, it’s probably time for it to go. One could do better with fewer annual payments and a lighter wallet to carry around.
Here are some final tips!
Before cancelling your card,
1. Pay your outstanding bill in full
Ensure that you pay off all outstanding payments in full before cancelling your cards. This includes pending payments that have not been posted to your credit card account yet.
2. Utilise all final rewards and points earned from the card
Don’t let those points go to waste. If you have rewards and points that have not been utilised yet, now is the best time to make the most out of your cashback and rewards before cancelling your card!
3. Cancel recurring payments
If you have recurring payments for credit card fees or annual payments, remember to cancel these payments by contacting your relevant banks. This is to ensure there will not be any automatic deductions even after you cancel your credit card.
Now feel free to go Marie Kondo in organizing your wallet! We hope this guide has been helpful for you.
Maximize Your Rewards with CardsPal
Want to maximise savings on your credit cards? Some of your cards allow you to be rewarded without paying a dime for your annual fees. Read here to find out more. If a cashback credit card is what you’re looking for, read here. And if you’re worried about expenses for your new home, check out our deals for household savings.
Download the CardsPal app on the App Store or Google Play Store now and get the latest deals, tailored according to the cards you own!