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With perks on the rise, credit card loyalty may not pay

"Loyalty doesn't pay when it comes to credit

"Loyalty doesn't pay when it comes to credit cards," says Matt Schulz, senior industry analyst for Credit: frankieleon via Flickr

A recent report found that 25 million credit cardholders hadn’t changed their main credit card in at least a decade, and another 20 million never had. Loyalty isn’t always a virtue. Change is good for the soul and the wallet.

“Loyalty doesn’t pay when it comes to credit cards,” says Matt Schulz, senior industry analyst for

Rewards are at unprecedented levels. “We’ve never seen as many 40,000 and 50,000 point bonuses. Cash back rewards are high too, with issuers even offering to double your cash back at the end of your first year,” says Schulz. The best way to get rewards is to apply for a new card and get a sign-up bonus.

With stiff competition, perks are plentiful and varied, like a card that donates a percentage of your purchases to an animal shelter, or saves toward college tuition.

There are plenty of reasons to seek new pastures, but be smart before switching.

What’s the downside?

Keep your oldest card. “The length of your credit history is 15 percent of a credit score. If you close your oldest credit card, your score will go down because your credit history changes,” says Stephen Lesavich, an attorney in Kenosha, Wisconsin.

If the new card has a lower or higher limit, or you close a card, leaving another card with a balance or leaving you with a card close to your max limit, your credit/debt ratio will change and your credit score will dip. Applying for a new credit card lowers your credit score, too.

And read the fine print.

That low interest rate may be only for a short period of time and may increase significantly afterward.

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