4 Good Reasons to Dump a Credit Card

Here's when it pays to get rid of a credit card.

Many of us have credit cards we use more frequently than others. You may even have some credit cards you rarely use at all.

It's generally good to hang onto a credit card that doesn't get much use, even if you're not in love with it. The length of your credit history plays a big role in determining your credit score, so closing longstanding accounts could cause your score to drop.

Furthermore, the amount of available credit you're using -- known as your credit utilization ratio -- is also a factor in calculating your score. An extra credit card could leave you with a higher total credit limit, keeping that ratio in favorable territory.

But sometimes, it does pay to get rid of a credit card that isn't working for you. Here are four good reasons to do it.

1. You pay an annual fee and get little in return

It's one thing to pay an annual credit card fee to get perks like extra reward points or other benefits. But if you're paying for a card that's comparable to a no-fee card you have, it's not worth forking over that money.

2. Your annual fee keeps climbing

You may start out with a reasonable annual fee on a credit card that increases over time until that fee is no longer worth paying. If that's the case, there's no need to spend that money when you can consider a card with a lower fee or no fee at all.

3. The customer service is poor

As a credit card holder, you deserve respect from your credit card company's customer service. You should have a relatively easy time getting a hold of a representative to answer any questions you have about your account or your card benefits. If you find that the customer service people you interact with are rude or lack knowledge, or that the wait times to speak to them are lengthy, that's reason enough to consider getting rid of your card.

4. You're falling victim to temptation

A higher spending limit on your credit cards can work to your advantage from a credit score perspective, but there's a danger in having a generous credit limit -- the temptation to spend more. If you fear you might use too much of your spending limit, you may be better off dumping a card. Lowering your credit limit may hit your credit score, but so would racking up a huge balance you fall behind on.

In many cases, it makes sense to stick a rarely used credit card into a desk drawer rather than cancel it. But in these situations, you may be more than justified in dumping your credit card and replacing it with a better one.