5 Signs It's Time to Apply for a New Credit Card

Is your credit card no longer a good fit? These five signs suggest you need to consider finding a new credit issuer to do business with.Image source: Getty Images.

Did you know many people stick with the same credit card for years without stopping to consider if the card is right for them? Applying for a new credit card doesn't often make it onto your to-do list with so many other financial tasks to handle, so cardholders tend to remain loyal to the card they've always had.

While this makes sense if the credit card you're using is a good fit, there are a ton of different credit cards out there with very different terms and conditions, so you should make sure the card you're using is actually the best one to meet your needs.

If you're unsure whether you should keep the card you have or shop around for a new one, look for these five signs it's time to change the plastic in your wallet.

1. You're stuck paying a really high APR

Ideally, you shouldn't carry a balance on your cards. If you do, you're probably paying a lot in interest and should work on paying off what you owe. Unfortunately, we don't live in an ideal world, and sometimes you may have no choice but to carry credit card debt for months or even years.

If you're currently carrying a balance and are paying a high annual percentage rate (APR), it may be time to look into balance transfer credit cards. These cards come with 0% promotional interest rates for months at a time, and some don't even charge a fee for transferring credit card debt from your old card to your new one.

If you could transfer your high-interest debt to a new card that charges no interest for a while, you could pay off that debt at a much lower cost. Just be sure to check what the interest rate will be once the promotional period is over. If it's higher than the rate on your current card, there's a possibility you could pay more in interest if you fail to pay off the full balance before the APR jumps up from 0%.

If you aren't carrying a balance right now but you do sometimes, compare your card's APR to competitors'. If you can find a card that charges a much lower rate, it makes sense to switch -- especially given that interest costs could dwarf even the most generous rewards your card provides.

2. Your credit card isn't rewarding your spending at all

Most, but not all, credit cards offer some type of rewards, such as cash back on purchases, miles, or points you can redeem for travel, gift cards, or merchandise.

If your card doesn't have a reasonable rewards program that provides at least 1% of purchases back in rewards -- and preferably 2% back or more on certain spending -- look into alternatives. There's no reason not to get rewarded for spending you're doing anyway.

3. Your spending habits have changed big time

When you signed up for your current credit card, hopefully you picked a card that had a rewards program well matched to your spending habits. If you were a jet-setter, you may have chosen a travel card, for example.

But spending habits don't necessarily stay static. Your former wanderlust may have faded once you had a family, and your spending may now be done mostly at grocery stores instead, or you may have a new job that requires you to log thousands of miles and spend a fortune on gas. When your spending habits go through dramatic shifts, look for a credit card that provides the best rewards for the things you're currently spending money on the most.

4. You aren't actually claiming the rewards you earn

Earning rewards for credit card use is great, but those rewards are useless unless you actually redeem them. If your credit card rewards program is so complicated that you never cash in your points, then it's not doing you any good. Likewise, if the rewards aren't things you actually want, it's silly to earn them.

If you find yourself in this situation, make it a point to claim the points you have outstanding now and then find a new card that makes redemption easier and more attractive. If nothing else, you could simply opt for a cash-back card that automatically deposits your funds into a bank or investment account or that provides your cash back as a statement credit. Then you wouldn't have to do anything to claim the rewards you've earned.

5. You're paying an annual fee but not using cardholder perks

Finally, if you're paying a big fee for your credit card, it's important to make sure the fee is worth it.

If the card's rewards program is generous and you earn enough extra points, miles, or cash back to justify the fee, the card may make good sense. Or if you get access to airline lounges, a statement credit for Uber or airline incidentals, hotel upgrades, or other perks, the card could also be a good one -- provided you actually use those cardmember benefits.

If you're paying $95 or more for a card without a great rewards program and perks you use, consider making a change. If you don't want to take a hit to your credit score by closing an old account, you could always call your creditor and see if you can downgrade to a card with no annual fee. Otherwise, it may be worth biting the bullet and canceling the card so you aren't stuck paying a fee forever -- especially if it's not your oldest card or the card with the highest credit card limit, and if you're not going to take out any big loans any time soon.

Once you've gotten rid of the costly old card, look around for a card with no annual fee or one that has perks you'll actually take advantage of.

Don't stick with your old card out of habit

If you spot any or all of these red flags, it's time to seriously consider making a change. Sticking with your old card out of habit could be costing you money, and with so many great credit cards out there, there's no reason you can't find one that's a better fit.