06-28Most people really don’t spend much time thinking about their credit cards. They likely signed up for their new credit card at the bank, or responded to a marketing pitch long ago.

Yet credit cards are important financial instruments and consumers are fortunate to enjoy an extremely competitive market for all sorts of cards.

Here are a few of the top reasons why cardholders should spend a little effort looking for a new credit card:

Rewards aren’t competitive

Are you receiving one cent in cash back per dollar spent? Are you just receiving a single airline mile per dollar, which can be hard to redeem?

Then you need to consider the latest generation of reward credit cards. Think of credit card rewards the same way you might think of returns on an investment; it is always smart to shop around for the best rates of return with the fewest costs.

Not receiving the best interest rate

Like rewards, credit card issuers also compete on the basis of interest rates. While interest rates have been stable due to the lack of changes in the Prime Rate, individual credit scores do improve over time.

First, cardholders should ask their current bank to lower their interest rate. But if that fails, don’t be afraid to apply for other credit cards that offer lower interest rates and get a new credit card.

Need a promotional financing offer

Credit card interest is very expensive because revolving debt is unsecured and the interest paid is not tax deductible.

Thankfully, banks are willing to offer 0% APR promotional financing to new credit card holders. This interest free financing can be on balance transfers, new purchases, or both.

New credit card applicants should keep in mind that most credit cards will charge a 3% balance transfer fee.

Attractive sign-up bonus with new credit card

In addition to promotional financing offers, banks love to feature sign-up bonuses in order to attract new customers to a new credit card. These bonuses can be in the form of points, miles, or cash back.

Just be aware that most offers will require cardholders to meet a minimum spending requirement of up to several thousand dollars within a short amount of time, typically three months.

Will applying for a new credit card hurt your credit score?

In most instances it won’t. Applying for a new credit card results in an inquiry to your credit history. Too many recent inquiries can be seen as a sign of financial risk and by itself, can result in a small, temporary drop in one’s credit score.

On the other hand, being granted a new line of credit with a new credit card increases one’s credit history while reducing the debt to credit ratio.

For a given amount of debt, adding an additional line of credit will result in a better ratio of debt owed to credit extended.

By keeping on the lookout for new offers, cardholders can take advantage of this vibrant market that is always eager to acquire new customers.

Just make sure you don’t use your credit card in a way that damages your credit.

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