What’s in your wallet? New survey suggests now may be the time to take a close look at your credit cards. The pandemic has caused some changes and you may find that your card no longer serves your best interests.
“I canceled my American Express because it was so expensive to have,” said one consumer CTV News spoke to in downtown Vancouver.
This can be the case for many cardholders who pay high fees. The rewards they offer may no longer be worth it. Ratehub, a website that allows consumers to compare credit cards, says consumers are moving away from reward cards.
“The point is, a lot of Canadians just don’t want travel points if they aren’t using them anytime soon and would rather have some hard cash in their bank account or credit card,” Mikael said. Castaldo, Managing Director of Daily Banking at Ratehub.ca.
A JD Power credit card customer satisfaction survey for 2021 found that 22% of respondents had postponed redeeming rewards for more than a year and 22% had abandoned cards with annual fees.
“There might be new products that you are not aware of or are unfamiliar with that may be better for you,” said John Cabell, director of banking and payment information at JD Power.
The survey also found that customers are more satisfied with their main credit card issuer than they were a year ago.
The highest rated card issuers in the perks, services and rewards satisfaction survey are:
1. Mandarin bank
2. Canadian Tire
3. PC funding
4. American Express
6. RBC Royal Bank
7. A capital letter
10. National Bank
11. BMO Bank of Montreal
13. TD Canada Trust
However, that doesn’t mean you have to cut and go. You have to consider what you are leaving on the table. How many rewards have you accumulated? If these are travel rewards, you may want to consider hanging on for a bit longer until you can use them, unless their value is less than the upcoming annual fee.
Canceling a credit card can also lower your credit score by increasing your credit utilization rate. It is the amount of credit available in relation to your debt. A lower credit score could mean higher interest rates on loans.
Rewards can still be attractive as long as you don’t have a balance and pay interest or missing payments, which can quickly nullify the rewards benefits.
Also, beware of chasing rewards by transferring balances to get bonus points etc. This is called card churning and it could damage your credit score.