Should You Be Loyal to Your Credit Card Company?

For many Americans, signing up for a credit card is something they do once or twice and never think about again. In fact, most people keep their card for years without ever considering whether it's the right one for them.

The big question is, does being loyal to your credit card company actually make sense for you?

Loyalty to your credit card company may be the wrong move

When it comes to your credit card, sticking with the same card issuer for years may actually not be the best financial move. And there are a few reasons why that's the case:

• You don't usually get any extra benefits for sticking with the same card company for years. Card issuers generally won't lower your interest rate if you have the card for longer or offer any other financial benefits for staying a customer. A small number of cards offer things like travel credits each year you stay with the company, but the cards that do this typically charge higher annual fees.
• Your spending habits may change over time. Usually, credit card companies offer extra bonus rewards for certain kinds of transactions. For example, you might get 5% cash back only on restaurant spending while getting less valuable rewards for other purchases you make. If your spending habits change over time, as many people's do, your old card may offer bonus rewards for something you no longer buy a lot of.
• You'll miss out on new cardmember benefits and offers. New cards come on the market periodically that may offer different benefits than those that were available at the time you signed up for your card. Card issuers also often provide bonus rewards to new customers who meet spending requirements. You'd miss out on these benefits if you just stick with your same card forever.

These are huge downsides of just sticking with the status quo when it comes to which credit card you use.

Here's what you should do instead

Rather than being loyal to your card company, it's worth doing an annual review of which credit cards are in your wallet and making sure they are still paying off for you. You can also check what new rewards card offers are out there to see if there could be an exciting new card that offers benefits that are a better fit for your spending needs.

You don't necessarily want to close down your old cards if you switch. Doing so could result in your credit score dropping as you close an old account with lots of history and you reduce the amount of credit available to you. But, unless your old cards have a high annual fee, you could just keep them open even if you don't use them much.

You also don't want to apply for new cards too often as too many inquiries on your credit report could hurt your score. But, if you open a new card every couple of years, this shouldn't do any lasting damage to your score and can allow you to always ensure you're using a credit card that's a good fit for your current situation.