4 Signs a Credit Card Is Worth Dumping

You may want to cancel a credit card if these factors apply to you.

There's a reason credit card holders are often advised to hang onto their cards, even those that don't get a lot of use. Closing a credit card could actually damage your credit score in a couple of ways.

First, one big factor that goes into that score is your credit utilization ratio, which measures the amount of your total credit limit you're using at once. If you close a credit card, you might slash your total credit limit, making it harder to keep that ratio in favorable territory.

Another issue with closing a credit card is it could impact the length of your credit history. If you close a long-standing account, the average length of your open accounts could eventually shrink, which isn't a great thing for your score.

But let's say you have a credit card whose spending limit isn't all that generous, and you haven't had open for such a long time. In that case, closing it might result in minimal credit score damage. If that's the case, here are four signs a given card is worth getting rid of.

1. It charges an annual fee but gives you little in return

In some cases, annual credit card fees can more than pay for themselves. Say you're charged $95 a year, but in exchange, you're able to rack up $500 in cash back and rewards, as opposed to the $250 you'd get with another card. That alone makes your fee worth it. But if you're paying a fee for a card that gives you nothing extra, then there's no sense in keeping it around.

2. Its rewards program leaves much to be desired

Many credit cards these days offer opportunities to score extra rewards or cash back. If you have a card that doesn't, or that limits you to 1% cash back across the board with no opportunities to snag bonus cash, then it's a card you may not want to hang onto. Similarly, if your card comes with rewards that expire quickly, you may want to swap it for a different one whose rewards program is far more flexible.

3. It charges a high interest rate

In an ideal world, you'd pay off your credit card balance in full every month and avoid racking up interest charges altogether. But we all know that's not always possible. If you have a credit card that charges far more interest than any other card in your collection, you may want to close that account.

4. Its customer service is poor

When you have issues with your credit card, whether due to a billing problem or fraudulent charge, you should be able to get in touch with a customer service representative easily. And once you do, that person should be in a strong position to help you through the issue at hand. If that's never your experience when dealing with your credit card issuer, it's a sign the card at hand isn't worth retaining.

Often, it makes sense to hang onto a credit card for the sake of your credit score. But if you have a fairly recently opened account that isn't serving you well, it may be time to let that card go -- especially if these signs apply to you.